Staff Report for Board Adoption Hearing, April 24, 2014 

## STAFF REPORT

For Board Adoption Hearing

Rule 101- Definitions

Rule 400- Permit Requirements

Rule 401- Permit Exemptions

Rule 432- Federal New Source Review

Rule 433- Rice Straw Emission Reduction Credits

Proposed Amended Rules Release Date: March 25, 2014

Schedule of Meetings

• Date of Public Workshop on Proposed Amended Rules:

• 2:00 p.m., Thursday, April 3, 2014, District Offic e, 629 Entler Avenue, Suite 15, Chico, CA Schedule of Hearing

• Date of Board Adoption Hearing:

• 10:00 a.m., Thursday, April 24, 2014, City of Orovi lle Council Chambers, 1735 Montgomery Street, Oroville, CA

Note: The Staff Report has been revised from the re port released on March 25, 2014

to further address SIP related concerns.2

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal STAFF REPORT



### For Board Adoption Hearing

Rule 101-

Definitions

Rule 400- Permit Requirements

Rule 401- Permit Exemptions

Rule 432- Federal New Source Review

Rule 433- Rice Straw Emission Reduction Credits

Proposed Amended Rules Release Date: March 25, 2014

Public Adoption Hearing: April 24, 2014 at 10:00 a. m. City of Oroville Council Chambers 1735 Montgomery Street, Oroville, CA

Contents Page Executive Summary ...................................................... 3

1. Program Purpose ...................................................... 3

2. Applicability ....................................................... 3

3. Discussion ......................

................................. 3

4. Requirements ....................................................... 5

5. Cost Impacts/Cost Effectiveness................................................ 1 3

6. Alternatives ....................................................... 13

7. Environmental Review ...................................................... 14

8. Required Findings ........................................................ 14

9. Attachments

Attachment A Rule 100- Defintions (Proposed Amendments)

Attachment B Rule 400- Permit Requirements (Proposed Amendments)

Attachment C Rule 401- Permit Exemptions (Proposed Amendments)

Attachment D Rule 432- Federal New Source Review (Proposed Amendments)

Attachment E Rule 433- Rice Straw Emission Reduction Credits (Proposed

Amendments)

Attachment F Notice of Public Workshop and Hearing

Attachment G Draft Resolution of Adoption3

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal STAFF REPORT

Executive Summary

The Butte County Air Quality Management District (D istrict) proposes to amend existing permitting rules to ensure the rules include all th e requirements for permitting minor and major sources for State and federal purposes to comply wi th the federal Clean Air Act requirements for new source review (NSR). Since only those requireme nts of federal law are required to be submitted as a revision to the State Implementation Plant (SIP), the District re-codified Regulation IV—Permits in May 2011 and included all minor and major administrative federal requirements into one rule, developed a separate ru le for permit exemptions, and split the State and federal NSR requirements into two rules. Base d on feedback from the U.S. Environmental Protection Agency (EPA), the District is proposing amendments to clarify and refine District five rules setting forth the definitions, the permitting requirements, and rice straw ERC banking implementation for SIP submittal to meet the origin al objectives.

This Staff Report will include applicable reference s from the re-codification Staff Report in May 2011 to document and demonstrate compliance with ap plicable federal requirements although some of those provisions are not modified in these amendments.

1.0 PURPOSE

To amend Regulation IV-PERMITS to prepare the rules for submittal in the District’s State Implementation Plan.

2.0 APPLICABILITY

Rule 101- Definitions sets forth definitions for all District Rules and Regulations unless a more specific definition is included in a rule or regula tion. The proposed amended Rule 400- Permit Requirements is applicable to all sources that emit or may emit air contaminants as the rules address the existing permitting application, review , and issuance requirements The proposed

amended Rule 401- Permit Exemptions sets thresholds for those sources that may emit le ss than significant emissions and be exempt from permitting requirements. Proposed amended Rule 432-

Federal New Source Review is applicable to major sources and major modificati ons for implementing federal requirements. Proposed amended Rule 433-Rice Straw Emission Reduction Credits implements the procedures and req uirements for issuing ERCs from the reduction in burning rice straw and was applicable to those growers who grew and burned rice straw during the baseline period (early 1990s).4

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal 3.0 DISCUSSION

Background:

The District’s New Source Review (NSR) program was established in its current form in January 1993 to ensure that the construction and op eration of new and modified stationary sources do not interfere with progress towards atta inment of the National and State Ambient Air Quality Standards. Because the District has bee n designated as nonattainment for failure to meet the federal 8-hour ground-level ozone stand ard and because portions of the District had been designated as nonattainment for failure to meet the 24- hour particulate matter less than 2.5 microns in diameter (PM2.5) standard (now meeting standards as demonstrated by a Clean Data Finding)

, the EPA requires the District to implement measures to reduce sources of ozone and PM2.5 and their precursors. Th e District makes its commitment to reduce pollution through the State Implementation P lan (SIP). The SIP is federally enforceable through EPA and the federal Clean Air A ct. A New Source Review

, or Preconstruction Review program

, is required as part of the SIP. The purpose of the proposed amended Rule 400 is to set forth the requirements t o for a source to apply for and obtain a permit through approval by the Air Pollution Contro l Officer. Rule 430- State New Source

Review was amended in May 2011 to clarify the minor sourc e NSR requirements and incorporate State permitting requirements. No addit ional changes are proposed to Rule 430.

The table below summarizes the District’s State and Federal attainment designations:

Pollutant State Federal

1 hour Ozone Non-Attainment -

8 hour Ozone Non-Attainment Non-Attainment

Carbon Monoxide Attainment Attainment Nitrogen Dioxide Attainment Attainment

Sulfur Dioxide Attainment Attainment Inhalable Particulate (PM10) Non-Attainment Attainm ent Inhalable Particulate (PM2.5) Non-Attainment Non-At tainment

In 2011, the District proposed a bifurcated approac h for permitting minor and major sources for State and federal purposes to comply with the f ederal Clean Air Act requirements for permitting. Only those requirements of federal law are require d to be submitted as a revision to the SIP; therefore, Rule 432- Federal New Source Review , was adopted to be submitted as a SIP revision that contains the requirements necessary t o satisfy federal laws and regulations for NSR. The amended Rule 432 did not contain provisions req uired by more stringent State laws. As discussed below, the District does not have a NSR r ule in the current federally-approved SIP and therefore is not subject to California’s SB288 requ irements.

During the evaluation of the existing rules in 2011 , the District recognized a need to combine administrative application and permit requi rements from the various rules into one rule and set forth exemptions from permit requireme nts in separate rules. As a result, Rule 400 now contains the administrative requirements fo r minor and major sources to obtain permits.5

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal The District submitted the May 2011 new and amended rules to EPA for SIP approval in 2013. During its initial review, EPA has identified portions of the rules that would require clarification or specific federal requirements to b e added to the rules. In lieu of accepting limited approval of the submitted rules and correct ing them at a later date, the District is proposing to amend the existing rules to include th e necessary elements and re-submit the rules for approval.

Protect California Air Act of 2003 (SB 288)

In September, 2003, the California legislature pass ed SB 288, which ostensibly prevents the weakening of State NSR rules. Health & Safety Code Section 42504 now states that no air district "may amend or revise its new source review rules or regulations to be less stringent than those that existed on December 30, 2002." T hi s ba s eline i s defined a s " di s trict rule s that the

di s trict ha s ad o pted a s of December 30

, 2002 ; th a t the ARB s ubmitted to the EPA for

in c lu s ion in the SIP ; and that have been approved

, or are pendin g appro va l b y the EPA "

. Thi s ba s eline doe s not a ppl y to the District since the NSR rule in effect in 200 2 had not been

s ubmitted to the EPA for inclu s ion in the S IP, had ne v er been appro v ed and was not pendin g approval. The current version of the District’s NSR rule was submitted for inclusion in the SIP in May 1993 but was withdrawn in December 1994. The provisions of the District’s NSR rule that was previously in the SIP were contai ned in Rules 4.3, 4.5A, 4.5B, 4-6, 4-6A, 4.9 and 4-11, which were rescinded by EPA action on May 2, 2001 as published in the Federal Register. The reason for this EPA action is unclear. The proposed amended NSR rules are not subject to SB288 restrictions for the above reasons.

4.0 REQUIREMENTS

Clean Air Act General Requirements

The District was designated “non-attainment” for th e federal PM2.5 NAAQS on December 14, 2009. Based on the 2010-2012 monitoring data, the District demonstrated meeting it is the PM2.5 NAAQS and submitted a Clean Data Finding for PM2.5 in 2013. EPA reviewed this submittal and, on October 10, 2013, determined the District had attained and continues to attain the PM2.5 NAAQS. As a result, no PM2.5 pl an is currently required; however, the District was required to submit a PM2.5 emissions i nventory and a nonattainment NSR program applicable to PM2.5. The submitted inventor y included banked PM2.5 emission

reduction credits to be used for future offsets.

The District is also “non-attainment” for the 2006 8-hour Ozone NAAQS and will be submitting an emissions inventory that includes the sources of ozone precursors in Butte County as well as include existing, banked emission reduction credits for the criteria pollutants that may contribute to the formation of ozone.

Omitting VOC and NH3 as PM2.5 precursors in Rule 43 2: EPA has determined that there are 4 potential precursors to PM2.5 emissions: Oxid es of Sulfur (SO2), Oxides of Nitrogen (NOx), Volatile Organic Compounds (VOC) and Ammonia (NH3). Accordingly, Rule 4326

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal includes SO2 and NOx as PM2.5 precursors, but does not include VOC and NH3 as precursors to PM2.5 formation because the District believes these pollutants are small contributors and has obtained a Clean Data Finding. The District’s Winter PM2.5 emissions inventory shows that emissions from mobile sources account for about 40 % of the District’s

VOC emissions and about 5% of the NH3 emissions. Co nsumer products contribute about 25% of the total VOC emissions. Farming/agricultur al operations (fertilizer/livestock/composting) account for almos t 90% of the NH3 inventory. These sources are not regulated as stationary sources req uiring permits and the contributions from those sources that are permitted are insignificant. In preliminary evaluation for the anticipated PM2.5 SIP submittal, ARB staff had dete rmined h igh PM2.5 values occur exclusively under stagnant winter conditions leadin g to accumulation of primary pollutants and formation of secondary components. While carbonace ous aerosols are primarily directly emitted into the air, nitrates are secondary pollutants for med in the atmosphere from gaseous NOx emissions and ammonia. ARB's programs aimed at red ucing NOx emissions have played an important role in reducing the nitrate fraction of PM2.5. Long term nitrate and NOx data collected throughout the State demonstrate that red uctions in ambient NOx concentrations have

resulted in commensurate reductions in PM2.5 nitrat e concentrations. Past modeling and monitoring studies in northern and central Californ ia highlight that reductions in VOCs are not important for reducing either carbonaceous aerosols or nitrate; therefore, they would not provide any benefit in reducing PM2.5 concentrations. Base d on the nature of the PM2.5 problem and an understanding of precursor effectiveness, as well a s the fact that the area has already attained the standard, VOCs and ammonia are therefore not signif icant PM2.5 precursors.

Summary of Significant Changes for Each Rule:

Below are brief summaries of the changes for each o f the five rules subject to this review:

Rule 100-Definitions The District’s definitions rule currently in the SI P is Rule 102 which was adopted in 1985 and accepted into the SIP in February, 1987 (52 FR 3226). The District has amended the Definitions Rule twelve times since this adoption. The District also recodified the

Definitions rule and renumbered it from Rule 102 to Rule 101. Since many District rules in the SIP rely on these definitions, the District is proposing to amend this rule to organize and update the definitions.

Several of the definitions are out of alphabetical order. These definitions have been moved without edits unless noted in this Staff Report. S everal definitions have been updated for completeness including PM10 and P2.5 which now incl ude gaseous pollutants. The Table for greenhouse gases warming potentials has been up dated to revise the warming potentials for 23 gases as updated by EPA in 2013.

Rule 400- Permit Requirements

The District combined the administrative permit app lication and review procedures found in the existing rules (400, 401 and 430) into one new Rule 400 in May 2011. EPA’s preliminary comments identify several areas that require clarif ication, inclusion or transferring administrative7

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal requirements or program requirements to or from Rul e 432 (i.e. moving generic modeling requirements from Rule 432 to Rule 400 or moving sp ecific major source requirements from Rule 400 to Rule 432).

Proposed amendments to Rule 400 include the followi ng (explanations are provided as necessary):

• Generally, remove requirements found in or unnecess ary references to other District rules

that are not in nor will be submitted into the SIP (i.e. Rule 430-State New Source Review. Any removed requirements are either not req uired by the CAA or have been incorporated into Rule 400 without directing to req uirements in a non-SIP rule.

• Generally, EPA staff has commented that terms, such as “stationary source” and “emissions unit”, are not used consistently and are corrected to be consistent.

• In definitions, “Initial Start-up” has been include d to clarify this term for certain requirements. Similarly, the term “Start-up” has be en clarified to include controls, instrumentation or other activities required or aut horized by a permit.

• Section 4 includes the standards for approving or d enying an application, such as: any potential source of air contaminants must obtain an Authority to Construct; the source must meet all applicable rules and regulations; req uirements for notifying an applicant whose application has been denied; and provisions t o ensure compliance with Health and Safety Code requirements related to toxic air conta minant (Note: toxic section is not included in SIP submittal). An amendment to this se ction clarifies that have a potential to emit emissions at 25 tons or greater (the State NSR offset threshold) are subject to public notice to allow the public the ability to comment a nd requests a hearing prior to approval of the ATC permit (more details on this amendment a re discussed below). This section also includes provisions for the Air Pollution Cont rol Officer (APCO) to request

information to assess the nature and extent of emis sions, provisions to have a Permit to Operate for an emissions unit, the procedures for r enewing a Permit to Operate including the review of existing conditions to ensure complia nce with current applicable requirements. This section includes a mechanism to transfer the ownership of a permit. In response to EPA preliminary comments, Section 4.7 i s being amended to clearly indicate that relocating permitted equipment or processes to another site requires a new permit and the original permit cannot be transferred. Sect ion 4.9 and 4.10 contain requirements to provide monitoring and sampling stations as requ ired by permit conditions and demonstration of compliance with permit emission li mits by source performance testing an emissions unit when required by the APCO. These sections include proposed amendments to simplify the requirements to include the basic elements required. Details of sampling and source testing requirements for spe cific sources and emissions units are included in the District’s permits. Requirements fo r conducting an Air Quality Impact Analysis have been moved from Rule 432 into Rule 40 0 as Section 4.11 since this requirement may be applicable to any source applyin g for a permit. Section 4.4.7 requires compliance with the State’s toxics notific ation regulation and is not intended for SIP submittal since this is a state only requiremen t. Section 4.12 includes an indemnification clause in which the applicant agree s to indemnify and hold harmless the APCO and District for actions relating to permit re quirements. The indemnification

clause will not be included in the submittal to the federal SIP.8

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal • Section 5 includes administrative requirements that allow for the receipt and processing of applications including time schedules for review and response, requirements to pay fees in accordance with District rules, various ste ps in reviewing the application including a completeness determination, the APCO pr eliminary decision, and procedures for denying or approving an application and issuing a permit. The proposed amendments include a requirement for the APCO to consider all comments received in response to public notice for an application prior to issuing t he permit. This section also contains administrative requirements for permits after issua nce including restrictions on defacing the permit, requirements to maintain the permit at the site, procedures for the APCO to suspend, cancel, or recommend revocation of a permi t, and procedures for an applicant or aggrieved party to appeal an APCO determination whi ch are not required by the CAA and are not being submitted for SIP approval.

• Section 6 includes requirements and standards for m onitoring and source testing methodologies and recordkeeping requirements to dem onstrate compliance with permit conditions and all applicable requirements. The pro posed amendments to this section clarify monitoring requirements and eliminate the S ection 6.3.1 related to Emissions Statements as this requirement was adopted under Ru le 434— Emissions Statements and submitted for SIP approval.

Public Notice Threshold Determination:

The District proposes a 25 ton per year per polluta nt Potential to Emit threshold for public notice. This is only applicable to pollutants that have an AAQS. This has traditionally been the threshold required for public notification for sour ces needing offsets for State permitting purposes. The District understands that public not ice thresholds should notify the public for permitting actions that may impact efforts to attai n NAAQSs. Since, the District’s primary cause for ozone nonattainment is from transport from the Sacramento and Bay Area metropolitan areas, the District proposes to maintain the public notice threshold at 25 TPY. This is consistent with the neighboring air districts in the Sacramento Val ley with similar air quality. The District also reviewed the 2012 inventory to determine the impact of this threshold on permitted emission. The District notes that 469 facilities are permitte d and, of these, 405 have total actual emissions less than two (2) tons per year. Based on evaluatio n of the source greater than 2 tons per year inventory, this proposed threshold will ensure that sources that account for 69 % of Reactive Organic Compound emissions and 82% of Oxide of Nitr ogen emissions are subject to public notice. For PM10 and PM2.5, the percentage of thes e emissions subject to public notice would be about 25%. This percentage is smaller as the Dis trict has many smaller, seasonal agricultural sources, such as almond hullers and rice storage an d drying facilities that contribute to the District total PM inventory, but individually are n ot significant. The District has determined that the primary contributor for the previous PM2.5 nona ttainment designation was from winter residential combustion of wood fired devices, not s tationary sources.

Rule 401- Permit Exemptions

In May 2011, the District adopted new Rule 401 iden tifying insignificant sources that are exempt from requiring a permit. The District is proposing minor amendments to this section to remove9

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal references to rules not included in the SIP, to cla rify exemption parameters, and streamline exemption for sources emitting less than 2 pounds p er day of criteria pollutants.

The proposed amended rule will replace the existing Rule 4-4 currently in the SIP. The proposed amended rule is more prescriptive and identifies th e types and sizes of equipment that will be exempt from permitting requirements. Rule 4-4 incl udes exemptions for vehicles, residential equipment, heating, air, ventilation, and refrigera tion equipment, internal combustion engines, cooling towers, steam cleaners, extrusion presses, space heaters, food preparation equipment, natural gas or LPG heated steam, mobile constructio n equipment, agricultural equipment and “other sources of minor significance”. The propose d rule clarifies the existing “exemptions” and expands on the list based on past APCO evaluations and determinations of the equipment as “sources of minor significance”. As a general rule, the limits are to approximate the California air districts generally recognized exemption thresh old of 2 lb/day of any regulated pollutant.

The proposed amended rule continues to specify that a permit application is not required for the source categories listed in the rule unless a speci fic determination by the APCO is required. In addition, the APCO is granted authority to request information from the person claiming an exemption to verify the source meets the exemption criteria.

Rule 401 provides that an emissions unit would not be eligible for exemption if:

• The APCO determines the source needs a permit;

• The source has actual emissions that exceed the Bes t Available Control Technology

thresholds set in Rule 430- State New Source Review ; however, the proposed amendment

removes this reference and includes the actual thre shold values to eliminate the reference to Rule 430 which is not being submitted into the S IP ;

• The Title V permit program requires a source to obt ain a permit;

• The source is subject to the New National Emissions Standards for Hazardous Air Pollutants (NESHAP) or the New Source Performance S tandards (NSPS), except for internal combustion engines rated at less than 50 h orsepower which are subject to an NSPS but will continue to not require a District pe rmit; or

• The APCO determines the source is a significant sou rce of toxic emissions.

The following source categories are included for ex emptions subject to the thresholds and

limitations in the rule:

• Combustion and heat transfer sources including stea m cleaners, cooling towers, small boilers, space heaters, certain internal combustion engines, fuel cells and microturbines, and certain process heaters like small crucibles an d ceramic kilns.

• Food and beverage processing equipment including eq uipment used in eating establishments for human consumption, small coffee roasters, non-commercial barbeques, ovens at small bakeries, and small brewi ng operations.

• Small spray coatings, solvent cleaning and composti ng operations.

• Vehicles and mobile equipment.

• Residential and commercial uses including equipment at residences, ventilation or comfort air systems, refrigeration units not servin g as pollution controls, and coatings applied to structures.10

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal • Portable handheld and certain abrasive blasting equ ipment.

• Certain agricultural sources.

• Replacement equipment meeting the rule criteria.

• Small printing and reproduction operations.

• Certain wastewater facilities.

• Certain woodworking and fabrication operations.

• Pilot tests for soil remediation projects.

• Specific walnut hulling and drying processes.

• Low Emitting Sources with actual emissions of less than 2 pounds per day or, if greater than 2 pounds per day, less than 75 pounds per year of criteria pollutant emissions.

The rule includes conditionally exempt sources whic h require the source to apply for an exemption and a determination by the APCO. This sec tion includes provisions for:

• Replacement of Equipment.

• Other low emitting sources that emit no more than 5 00 pounds per year of a regulated pollutant that is reviewed and confirmed by the APC O.

• Other sources wanting confirmation in writing that a specific emissions unit is exempt under the provisions of Rule 401 may voluntarily su bmit an application for a written

determination.

The proposed rule requires the owner or operator cl aiming an exemption to keep documentation of the applicable information that demonstrates com pliance with the exemption criteria. This documentation must be current for the previous two years.

If a source loses “exempt” status with the adoption of this rule, the source shall have six (6) months to apply for a permit under the provisions o f Rule 400. In addition, a source that was exempt and exceeds an exemption limitation shall ha ve 30 days to submit an application for a permit or other written authorization from the APCO

.

Rule 430- State New Source Review

The District adopted amended Rule 430 in May 2011 t o fulfill CAA program requirements to have New Source Review for minor sources. No change s are proposed for Rule 430 and it will not be submitted for SIP approval. This rule is not a part of these rule actions but is mentioned as it is part of the overall SIP approval process.

Rule 432- Federal New Source Review

Rule 432 establishes nonattainment air pollutants p re-construction review requirements for new and modified major stationary sources and major mod ifications. In May 2011, the District repealed the existing Rule 432 and adopted a new Ru le 432 due to the extensive changes to the rule. The previous rule lacked three major element s of the federal program proposed in the new rule. These include the Alternate Siting requiremen t, Certification of Compliance and Potential Visibility Impacts review.11

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal The District is proposing amendments to Rule 432 to clarify the applicability of the rule, add or clarify definitions, remove references to requireme nts in rules not included in the SIP, and add or clarify program requirements in the rule.

In the Purpose and Applicability Sections, the lang uage has been reworded to clarify the rule regulates nonattainment pollutant emissions from ma jor sources and major modifications.

Amendments are proposed to the Section 2 Definition s to:
Delete some terms not used in this version of the r ule, such as “Control Efficiency”. Include all applicable pollutants in definitions where they may have been omitted. Remove Ambient Air Quality Standard and add a definition for National Ambient Air Quality Standards since only National Standards are applicable to this rule. The term “Basic Design Parameters” was defined.

EPA recommended “Baseline Actual Emissions” be refe rred to as noted in parenthesis more traditionally as “Historical Actual Emissions”. The definition has not change but was moved to be in alphabetically order. Under the term, “Impact Analysis”, a program requirement to add ground level concentrations to background has been moved to the Air Quality Analysis section in Rule 400. The definition of “interpollutant” has be en clarified to indicate that precursors may be interchanged. PM10 and PM2.5 definitions now includ e that gaseous emissions which may condense at ambient temperatures are also considere d to be particulate.

Section 5 relates to the requirements for emissions units subject to the rule and has been clarified to ensure the rule meets federal program requiremen ts. The requirement for offsets needed for carbon monoxide has been deleted since Butte County was designated attainment for CO as published in the Federal Register on June 1, 1998. Also in this section, the rule is proposed for amendment to not allow interpollutant offsetting fo r PM2.5 Unless EPA approves specific interpollutant offset ratios for PM2.5 in the SIP.

Section 6 includes the calculation requirements for determining offsets and has been streamlined to include only the necessary federal requirements. A requirement that offsets must be identified at the time of application but not surrendered unti l starting operation has also been added.

Amendments to update requirements are proposed for the administrative requirements in Section 7 of the Rule that are necessary since the rule was adopted in May 2011. Revisions to the requirements for Potential Visibility Impacts inclu de requiring an applicant of a proposed new major source or major modification to perform an an alysis on the visibility impacts to a Class 1 area and that the APCO shall deny the permit for an y source subject to this requirement that has an adverse impact on visibility of a Class 1 area.

The District intends to follow the guidance from EP A Region IV (March 8, 2011 by Beverly H. Banister) and the Federal Land Managers Group to im plement the visibility requirements. These guidance documents state “that may affect” would in clude any new major source or major modification that is within 100 kilometers of any C lass 1 area and possibly sources further than 100 km if other factors, such as the size of the st ationary source, causes concerns about possible visibility impacts to any Class 1 area.12

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal The closest Class 1 area to Butte County is Lassen Volcanic National Park which is located approximately 35 kilometers due north of the northe rn most portion of the County and about 88 kilometers northeast of Chico, CA, the County’s lar gest municipality. The Caribou Wilderness, Thousand Lakes Wilderness, and Yolla Bolly-Middle E el Wilderness areas are also located within 100 kilometers of the northern boundary of t he District. To the southeast, the Desolation Wilderness area is located approximately 100 kilome ters from the southeastern boundaries of the District. The air quality analysis requirements ha ve been moved to Rule 400 as they are a general permit requirement. Rule 432 requires any a nalysis to adhere to requirements in Rule 400. Also, a CAA requirement that any source that b ecomes a major source due to a relaxation in any condition or permit limit shall be reviewed as if the source had not been constructed has

been included.

Finally, the District is proposing to delete standa rds that were incorporated into the Rule in 2011 as part of federal NSR Reform measures. These include Less Than Significant Increase Exclusion and Plant-wide Applicability Limit (PAL) Exclusion. The District is proposing to delete these measures since the existing permitting program required at the State level is significantly more stringent than federal requireme nts and, therefore, the intended permitting flexibility benefits from these federal measures do not exist for District sources. In reviewing the Technical Support Document for ano ther Sacramento Valley air district 1

, the District understands that Section 116 of the CA A provides that a State may adopt regulations that are more stringent than those cont ained in the CAA or implementing regulations. In 1988, California adopted the Calif ornia Clean Air Act which set thresholds for new and modified sources to require controls an d offsets which were significantly lower than the federal thresholds at that time (and lower than thresholds included in the federal CAA amendments of 1990). The District definition of BACT is equivalent to the federal LAER definition. In addition, the calculations used to determine offset requirements for State purposes The District maintains that the requ irements in the District’s permitting program to meet State requirements are significantl y lower than federal requirements. For example, the State Best Available Control Technolog y (BACT) thresholds for new or modified sources are in pounds per day (i.e. NOx is 25 lbs/day) where the federal standard for new sources is 100 Tons per year (approx. 550 l bs/day average) and for modified sources is 40 TPY (approx. 220 lbs/day average). S tate offsets are required for all nonattainment pollutants over 25 tons per year and the federal threshold is 100 tons per year a new source. CA CAA assures the permit program i s at least as stringent as a program required by the federal CAA. Therefore, the Distric t rules are not required to include these additional NSR Reform requirements.

Rule 433—

Rice Straw Emission Reduction Credits

Rule 433 was adopted in August 2010 to develop a fe derally enforceable program to bank

emission reductions from discontinued rice straw bu rning as allow by California Health and Safety Code§ 41865. The proposed amendments are to remove references to rules not

1 EPA, Region IX, Technical Support Document, Sacram ento Metropolitan AQMD Rules 214 and 203, May 6,

2011.13

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal included in the SIP and to include those referenced requirements if necessary. The District is also addressing earlier EPA comments in this staff report.

Regarding the EPA’s concern over the Historical Bur n Fraction used in Rule 433: The District selected 1991 as the representative year s ince the acreage was considerable less than the average acres planted and the amount burned was nea rly the acres planted. The District believes

it resolved EPA’s concerns related to the actual fr action of acres in the Staff Report is 97.5% not 100% at the time of adoption. During the District’s participation in the Sacramento Valley Basinwide Control Council which recognized that alt hough averages are used to determine the acres planted and the corresponding burn acres are represented in the report, those growers that burned fields during the baseline period burned 100 % of a field and not 97.5% of it. Therefore, the District wished to maintain a HBF of 1.00 and p roposed to do so by reducing the total allowable burn allocation acres to compensate for t he emissions that would be reduced by using a HBF of 0.975. Calculation: 69,142 burned acres o riginally proposed – (69,142* (1.00- 0.975))=67,413 total (adjusted) acres b urned. The emissions inventory from the originally proposed 69,142 acres times the EPA presumed HBF of 0.975 will be the same as the adjusted acres and ensure the reductions are still real, sur plus and quantifiable. The District replaced the maximum allowable burn acres (currently 69,142) in the rule with the adjusted acres (67,413). During the available registration period, only one grower chose to bank Rice Straw ERCS and this amounted to banking emissions from only 196 ac res in the District or only 0.3% of the total acres eligible for the program. The application per iod for obtaining Rice Straw ERCs has expired.

EPA has concerns that for federal offset purposes, the ERCs must come from the nonattainment areas in Butte County. The proposed amended rule n ow includes this requirement. This

amendment is considered administrative since the PM 2.5 attainment areas of the county are

mountainous and the District has no records of rice being grown in these regions above 3000 feet

in elevation.

5.0 COST IMPACTS/COST EFFECTIVENESS:

The proposed amended rules do not implement an emis sion control measure or other requirement that is not already in place and therefore are not subject to the cost effectiveness mandate. The proposed amended rules are administrative in nature and no additional costs to either the District or stakeholders are expected. In addition, because BACT requirements and feasible control measures are not amended, an incremental cost-effec tiveness analysis under Health & Safety Code Section 40920.6 is not required.

6.0 ALTERNATIVES:

The Governing Board may choose to:

a) Approve the rules as proposed; b) Direct staff to modify the proposed amended rules a fter receiving public comments during the hearing; or14

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal c) Take no action. If your Board decides to not take a ction, EPA will be required to give a limited approval of the rules and require the Distr ict to make the necessary corrections within a specified time frame, usually 18 months. I f the District fails to make the necessary program corrections, Butte County could b e subject to federal sanctions, including withholding of highway funds.

7.0 ENVIRONMENTAL REVIEW AND COMPLIANCE

Staff has determined that proposed amended and the proposed amendments to the rules are exempt from CEQA requirements and are therefore con sidered to be ministerial in nature and thus are statutorily exempt from CEQA, pursuant to state CEQA Guidelines Section 15268 – Ministerial Projects, as defined by CEQA Guidelines Section 15369.

8.0 REQUIRED FINDINGS:

Findings required by Division 26 of the California Health and Safety Code requires local districts to comply with a rule adoption protocol as set fort h in Section 40727 of the Code. This section has been revised through legislative mandate to con tain six findings that the District must make when developing, amending, or repealing a rule or r egulation. These findings, and their definitions are included in the following table.

Table 7

FINDING DEFINITION REFERENCE Authority A District shall adopt Rules and

regulations and do such acts as may be necessary or proper to execute the powers and duties granted to, and imposed upon, the District by this division and other statutory provisions. California Health and Safety Code Division 26, Part 3, Sections 40000 and 40001, 40702, and 42300 et. seq., are provisions of law that provide the District with the authority to adopt these proposed rules.

Necessity The District has demonstrated that a

need for the Rule, or for Rule amendment or repeal. Federal and State law requires the District maintain a minor and major source permitting program. The proposed rules provide the requirements to implement the State and federal requirements. Clarity The Rule is written or displayed so

that its meaning can easily be understood by the persons directly affected by it. There is no indication that the proposed amended rules are written in such a manner that persons affected by the rule cannot easily understand it. Consistency This Rule is in harmony with, and not

in conflict with or contradictory to, existing statutes, court decisions, or State or federal regulations. The District has found that the proposed amended rules are consistent with applicable statutory requirements.

Non- The Rule does not impose the same The proposed rule duplicates federal15

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal Duplication requirements as an existing State or

federal regulation, unless the District finds that the requirements are necessary and proper to execute the powers and duties granted to, and imposed upon, the District. rules or regulations for permitting programs. The duplicative requirements are necessary in order to execute the powers and duties imposed upon the District.

Reference Any statute, court decision, or other

provision of law that the district implements, interprets, or makes specific by adopting, amending, or repealing a regulation. California Health and Safety Code Division 26, Part 3, Sections 40000 and 40001, 40702, and 42300; Clean

Air Act amendments of 1990 and related regulations.

9.0 ATTACHMENTS

Attachment A Rule 100- Defintions (Proposed Amendments)

Attachment B Rule 400- Permit Requirements (Proposed Amendments)

Attachment C Rule 401- Permit Exemptions (Proposed Amendments)

Attachment D Rule 432- Federal New Source Review (Proposed Amendments)

Attachment E Rule 433- Rice Straw Emission Reduction Credits (Proposed

Amendments)

Attachment F Notice of Public Workshop and Hearing

Attachment G Draft Resolution of Adoption16

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal Attachment A

Rule 100-

Definitions (Proposed Amendments)

Attachment B

Rule 400- Permit Requirements (Proposed Amendments)

Attachment C

Rule 401- Permit Exemptions (Proposed Amendments)

Attachment D

Rule 432- Federal New Source Review (Proposed Amendments)

Attachment E

Rule 433- Rice Straw Emission Reduction Credits (Proposed Amendments)

Attachment F Notices of Public Workshops and Hearing

Attachment G Proposed Resolution of Adoption17

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal Attachment A

Rule 100-

Definitions (Proposed Amendments)18

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal Attachment B

Rule 400- Permit Requirements (Proposed Amendments)19

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal Attachment C

Rule 401- Permit Exemptions (Proposed Amendments)20

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal Attachment D

Rule 432- Federal New Source Review (Proposed Amendments)21

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal Attachment E

Rule 433- Rice Straw Emission Reduction Credits (Proposed Amendments)22

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal Attachment F Notices of Public Workshops and Hearing23

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal

NOTICE OF PUBLIC WORKSHOP AND HEARING

NOTICE IS HEREBY GIVEN that the Butte County Air Qu ality Management District (District) Governing Board will hold a public workshop and hea ring to consider adoption of proposed

amendments to Rule 100- Definitions , Rule 400- Permit Requirements, Rule 401- Permit Exemptions, Rule 432- Federal New Source Review and Rule 433- Rice Straw Emission Reduction

Credits. The proposed amendments to the rules streamline th e rules to improve consistency, remove unneeded references, and include missing ele ments necessary to fulfill the minimum permitting program requirements for submittal into the District’s State Implementation Plan. The proposed amendments do not change the current imple mentation of the permit program. The time, date, and location of the public workshop and hearing are given below: Public Workshop: 2:00 p.m. April 3, 2014, District office, (address below) Public Hearing: 10:00 a.m. April 24, 2014, City of Oroville Council Chambers, 1735 Montgomery Street, Oroville, CA 95965 The Staff Report and proposed amended rules may be reviewed at the District office at the

address below or on the District website: www.bcaqmd.org . For additional information please contact David Lusk at (530) 332-9400, ext. 107. Wri tten comments on the proposed rules must be submitted by April 17, 2014 to: Board Clerk, But te County Air Quality Management District, 629 Entler Avenue, Suite 15, Chico, CA 95928.

DATED: March 25, 2014

BY: W. James Wagoner

Air Pollution Control Officer24

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal Attachment G
Proposed Resolution of Adoption25

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal DRAFT RESOLUTION 2014-04
BEFORE THE BOARD OF DIRECTORS OF
BUTTE COUNTY AIR QUALITY MANAGEMENT DISTRICT

STATE OF CALIFORNIA

Resolution 2014-04.....................................................................) Adopt Proposed Amended Rules 101, 400, 401,432, and 433 ............)

WHEREAS, the Butte County Air Quality Management Di strict Board obtains its authority to adopt, amend, or repeal rules and regulations from California Hea lth and Safety Code Sections 40000, 40001, 40701, 40702;

AND WHEREAS, the Butte County Air Quality Managemen t District Board has determined that the proposed amended rules are written such that the me aning can be understood by the persons directly affected by it (Health and Safety Code Section 4072 7(b)(3));

AND WHEREAS, the Butte County Air Quality Managemen t District Board has determined that the proposed amended rules adopted herein is in harmony with, and not in conflict with or contradictory to existing statutes, court decisions, or state or fed eral regulations (Health and Safety Code Section 40727(b)(4));

AND WHEREAS, the Butte County Air Quality Managemen t District Governing Board has determined that proposed amendments to Rules 101-D efinitions , Rule 400- Permit Requirements , Rule 401- Permit Exemptions , Rule 432- Federal New Source Review (FNSR) , and Rule 433- Rice Straw Emission Reduction
Credits are necessary to streamline and clarify the existi ng rules to ensure they contain the necessary program elements as required by the federal Clean A ir Act prior to re-submittal for State Implementati on Plan approval;

AND WHEREAS, the Butte County Air Quality Managemen t District Governing Board has determined that proposed amendments to Rule 400- Permit Requirements are necessary to remove references to rules not intended for SIP submittal, clarify public notice t hresholds and ensure the APCO considers comments pr ior to issuing a permit, include air quality analysis r equirements previously included in the New Source R eview rules, and to move and delete sections more appropr iately located in the New Source Review rules;

AND WHEREAS, the Butte County Air Quality Managemen t District Governing Board has determined that Sections 4.4.7, 4.11, 5.2.4.5, 5.3, 5.4, 5.6, 5.7, and 5.8 of Rule 400 are applicable to local and Sta te requirements and are not be include in the federal SIP submittal;

AND WHEREAS, the Butte County Air Quality Managemen t District Board has determined proposed

amendments to Rule 401- Permit Exemptions are necessary to include applicable thresholds in non-SIP rules and remove an unintended application requirem ent for insignificant sources, and provide an26

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal intermediate threshold for exemption review and det ermination;

AND WHEREAS, the Butte County Air Quality Managemen t District Board has determined that the proposed amendments to Rule 432- Federal New Source Review are necessary to ensure all major and major modifications to sources meet the applicable federal requirements prior to obtaining a permit, t o include specific definition and requirements to mee t all Clean Air Act program requirements and to mov e requirements of the existing rule to more appropria te sections of Rule 400- Permit Requirements ;

AND WHEREAS, the Butte County Air Quality Managemen t District Board has determined that the proposed amendments to Rule 433- Rice Straw Emission Reduction Credits are necessary to ensure credits issued under this rule are only federally a pplicable in located in the nonattainment areas;

AND WHEREAS, the Butte County Air Quality Managemen t District Board has determined that the proposed amended Rules 101-D efinitions , Rule 400- Permit Requirements , Rule 401- Permit Exemptions

, , and Rule 433- Rice Straw Emission Reduction Credits do not duplicate local, state or federal rules or regulations for permitting programs;

AND WHEREAS, the Butte County Air Quality Managemen t District Board has determined that the portions of the proposed new Rule 432 duplicates federal rul es or regulations for permitting programs and the duplicative requirements are necessary in order to execute the powers and duties imposed upon the District;

AND WHEREAS, the District staff has made notice of and held a public workshop meeting on the proposed amended Rules on April 3, 2014 and received no publ ic comments on the rules;

AND WHEREAS, the Butte County Air Quality Managemen t District Board conducted public hearing on April 24, 2014 concerning the proposed rules herein ;

THEREFORE, BE IT RESOLVED, that the Butte County Air Q uality Management District Board hereby adopts proposed amendments to Rules 101-D efinitions , Rule 400- Permit Requirements , Rule 401- Permit Exemptions , Rule 432- Federal New Source Review (FNSR) , and Rule 433- Rice Straw Emission Reduction
Credits with an effective date of April 24, 2014, as propos ed in the attachments to the March 25, 2014 Staff Report released for Public Workshop with typographi cal, formatting, and other changes as noted in the Staff Report released for Board Adoption Hearing in cluding indicating Rule 400 Section 4.4.7 is not intended for SIP submittal, Rule 400 Section 4.5 cl arifying the public notice threshold is for each AA QS pollutant, and Rule 401 Section 2.6 removal since m ethodologies are changing and APCO has this authority in Section 2.3;

BE IT FURTHER RESOLVED, that the Butte County Air Qual ity Management District Board directs staff to prepare the designated portions of Rules 101-D efinitions , Rule 400- Permit Requirements , Rule 401- Permit Exemptions , Rule 432- Federal New Source Review (FNSR) , and Rule 433- Rice Straw Emission Reduction
Credits for submittal into the federal ozone and PM2.5 non attainment, if applicable, State Implementation Plans as noted in the Staff Report for Board Adopti on.

On Motion of ______________, Seconded by __________ ___, the foregoing resolution is hereby PASSED27

Staff Report For Board Adoption Hearing April 24, 2014 Proposed Amended Rules for SIP Submittal AND ADOPTED BY THE Air Quality Management District Bo ard of Directors on this 24th day of April, 2014 by the following:

AYES:
NOES:
ABSTAIN:
ABSENT:

_______________________________________ W. James Wagoner, Air Pollution Control Officer Butte County Air Quality Management District

I hereby attest that this is a true and correct cop y of the action taken by the Butte County Air Quality Management District Board of Dir ectors on April 24, 2014

ATTEST: ______________________________________

Cora Collins, Clerk of the Governing Board