Prepared by: Matthew Baldwin

Air Quality Engineer

Approved by: David A. Valler, Jr.

Air Pollution Control Officer 

# F EATHER 

# R IVER 

# A IR 

# Q UALITY 

# M ANAGEMENT 

# D ISTRICT

S TAFF 

## R EPORT



## P ROPOSED 

## R ULE 

## :

R EGULATION 

## X R ULE 

## 10. 10 P REVENTION OF 

## S IGNIFICANT 

## D ETERIORATIONi



### T ABLE OF 

### C ONTENTS

Table of Contents

................................ ................................ ................................ ......................... i

1.0 Executive Summary

................................ ................................ ................................ ........... 1

2.0 Discussion

................................ ................................ ................................ .......................... 1

3.0 Impacts of the New Rule

................................ ................................ ................................ .... 4

4.0 Environmental Review and Compliance

................................ ................................ ............. 5

5.0 Required Findings

................................ ................................ ................................ .............. 5

6.0 Comparison with Other Applicable Regulations and Requirements

................................ .... 6

7.0 Public Notice

................................ ................................ ................................ ...................... 6

ATTACHEMENT A: Proposed Text of Regulation X: Rule 10.10: Prevention of S ignificant

Deterioration

................................ ................................ ................................ .............................. 1Staff Report Page 1 of 6

Regulation X; Rule 1 0.10 Prevention of Significant Deterioration



### 1.0 E XECUTIVE 

### S UMMARY

Prevention of Significant Deterioration (PSD) is a federal permitting program for new major stationary facilities and significant modifications to existing major facilities located in areas

classified as attainment or in areas that are unclassifiable for a ny criteria air pollutant. As a District, we are more familiar with the Title V Federal Operating Permit Program which is form major sources of pollutants regardless of attainment status. Title V permits ultimately incorporate PSD permit requirements. The PSD permitting program is a pre

- construction permit that is currently administered by EPA Region IX for both Sutter and Yuba Counties.

When Greenhouse Gases (GHG) were recently added as a regulated pollutant, new and

modified major sources of GHG became su bject federal permitting requirements. EPA Region IX could possibly have a significant increase in PSD permit applications throughout the state.

The EPA staff could be overwhelmed with these new permit applications and the delay in processing them could be two years or more. Consequently, EPA is encouraging local air districts to take on PSD permitting responsibility for projects that occur within their jurisdiction. For an air district to take on PSD permitting, the district needs to adopt a PSD permitting rule that mirrors the federal requirements and have that rule approved by the Air Resources Board (ARB) and EPA for incorporation into the State Implementation Plan (SIP)

.

The most straightforward way for an air district to take on PSD responsibility is t o adopt a rule that incorporates the federal requirements by reference (IBR). CAPCOA has developed a model rule in conjunction with EPA and ARB staff.

The Feather River Air Quality Management District (District) staff is proposing that the Board adopt this CAPCOA model rule with various options in the model rule tailored to the District’s specifics.



### 2.0 D ISCUSSION

The federal PSD program is detailed in 40 Code of Federal Regulations (CFR) Part 52.21. The details of the PSD program are quite involved. Below are some of the generalizations as they apply to the District.

Who is subject to permitting?

A pre

- construction PSD permit is required for any new major source or significant modification of an existing major source of any air pollutant regulated under the Fed eral Clean Air Act; that is

not a non

- attainment pollutant. Currently in the District, the PSD pollutants include PM, PM10, Carbon Monoxide, Nitrogen Dioxide, Sulfur Dioxide, Lead, Fluorides, Sulfuric Acid Mist, Total

reduced sulf ur, Reduced sulfur compoun ds, Greenhouse Gases, and other industry specific pollutants, such as those from Municipal Waste Combustors.

 A major source is a facility that emits 250 tons per year of an applicable pollutant, except for GHGs which the facility must emit 100,000 tons per year in terms of Carbon Dioxide equivalent units (CO 2 e). There are 28 types of industries where a major source is defined as 100 tons per year of an applicable pollutant, with the same exception for GHGs. Only two of these 28 source types are likely to be constructed within the District;Staff Report Page 2 of 6

Regulation X; Rule 1 0.10 Prevention of Significant Deterioration

a fossil

- fuel fired steam electric plant or a boiler of over 250 million British Thermal Units per hour heat input.

 A significant modification of an existing major source is defined as a modification with an

increase of as much or more than 100 tons per year (TPY) of Carbon Monoxide, 15 TPY

of PM 10 , 40 TPY of Nitrogen Dioxide or Sulfur Dioxide, 0.6 TPY of Lead, or 75,000 TPY

of GHGs.

With the recent addition of GHG as a regulated pollutant that is subject to PSD regulation, there are possibly five facilities in the District that are classified as major sources because of their GHG emissions; Sutter Energy Center, Feather River Energy Center, Greenleaf Unit 1, Greenleaf Unit 2 / Yuba City Energy Center, Yuba City Cogeneration , and Recology Ostrom Road. However, these facilities will only have to obtain a PSD permit for GHG emissions if they undertake a modification that will increase their GHG emissions by at least 75,000 tons per year

CO 2 e.

What are the primary requirements o f a PSD permit?

There are two main requirements to be met before a PSD permit is issued; Best Available Control Technology (BACT) is employed, and an air quality impact analysis is conducted showing that the emissions increase from a source will not cause or contribute to an exceedance of a National Ambient Air Quality Standard (NAAQS) or impact Class I areas , such

as National Parks.

BACT must be employed on each emissions unit that emits an applicable air pollutant in excess of the significant modification threshold for that pollutant. Because GHGs are a newly regulated pollutant, BACT for GHG has not been thoroughly developed. An example of a PSD source of

GHGs would be a fossil

- fueled boiler of about 200 million Btu/hr or more operating full time. In

this case, BACT would likely result in a fuel efficiency requirement in order to minimize carbon

dioxide emissions.

An air quality impact analysis can be a very rigorous analysis which compares the background concentration of a pollutant plus the potential to emit of the new emission unit(s) to the NAAQS

on an hour

- by

- hour basis over the course of a year. In order to determine the background concentration of the pollutant, either a public monitoring site nearby which has collected three to five years of ambient data, or one year of site

- specific monitoring is required . For site

- specific monitoring, the pollutant concentration and weather data must be collected on an hourly basis. If
there are other facilities with issued Authorities to Construct that have not begun operation at the time of the site monitoring, the potential to emit of these other facilities must be added to the background concentration.

If the air quality impact analysis shows an exceedance of the NAAQS, additional emission

contr ols or operational limitations must be imposed to prevent the exceedance. If there is still concern that the NAAQS may be exceeded, then post

- project air quality monitoring may be imposed on the applicant.

The federal regulations impose a maximum amount of concentration that a single source can increase the ambient air concentration regardless of whether a NAAQS is exceeded or not. This is called an ambient air increment and is different for each pollutant and is measured in micrograms per cubic meter.Staff Report Page 3 of 6

Regulation X; Rule 1 0.10 Prevention of Significant Deterioration

Ther e is no National Ambient Air Quality Standard or ambient air increment established for GHGs, therefore the air quality impact analysis is not required for GHGs. Rule 10.10 exempts the applicant from some of the air quality analyses for GHGs.

What are the p ossible benefits of the District taking on PSD responsibility?

For a source within the District that is planning a new major facility, or an existing major facility planning significant modification, the time to obtain a PSD permit from EPA under the curre nt situation could take several years. If the District were to have PSD authority, then the permit process time would likely be much shorter.

When EPA is the permitting authority for a PSD permit, then the federal Fish and Wildlife

Service and the National Marine Fisheries Service must be consulted regarding the Endangered Species Act (ESA) requirements because the issuance of the PSD permit is conserved a federal action. If the air district is the permitting authority, then this consultation is not require d, although the source is still required to comply with applicable ESA requirements. However, such impacts are likely to be addressed through the California Environmental Quality Act (CEQA) by the lead

agency.

Any appeals of a PSD permit issued by EPA are heard by the federal Environmental Appeals Board (EAB) in Washington, D.C. Appeals concerning a PSD permit issued by the District are heard by the District Hearing Board. When an air district is the permitting authority, appeals are handled locally with mo re scheduling flexibility.

The downside of the District taking on PSD responsibility is additional cost to the applicant for costs incurred by the District

. A downside to the District will be the need to acquire the knowledgebase to administer the PSD perm itting program. The timing of gaining PSD knowledge is uncertain since there are currently no new PSD facilities on the horizon.

Chapter 4.5, Protect California Air Act of 2003 Requirements :

In an effort to minimize the potential impact of federal NSR reform, the state legislature passed the Protect California Air Act of 2003 (SB288). The Act ( CH&S Code § 42500 through 42507) is intended to minimize the impact of the relaxation of the federal new source review program on air quality in California. The A ct prohibits districts from making revisions to their SIP approved NSR rules in existence on December 30, 2002 that would result in weakening their rules. These revisions include but are not limited to, revisions to rule applicability, changing the definit ion of modification so that NSR is not triggered or triggered at a higher level of emission increases, or relaxing BACT, air quality analysis, and publ ic participation requirements. The Act does permit districts to deviate from these requirements under spe cified conditions.

The proposed Rule 10.11 meets this mandate. Rule 10.11 does not relax existing requirements to obtain a permit and undergo NSR analysis; does not relax the requirement to apply BACT to a new or modified emission unit; does not relax the requirements or thresholds for performing an air quality impact analysis as required by Rule 10.1 G; does not relax the requirements for monitoring, recordkeeping, and reporting; does not relax the requirement for regulating any air pollutant; and does not relax any requirement for public participation.Staff Report Page 4 of 6

Regulation X; Rule 1 0.10 Prevention of Significant Deterioration



### 3.0 I MPACTS OF THE 

### N EW 

### R ULE



### F ISCAL 

### I MPACT Currently, EPA does not charge any fees for processing a PSD permit, therefore Adoption of Rule 10.10 will have an additional fiscal impact on businesses that are procee ding with a new major source or a significant modification of an existing major source of an attainment pollutant, however, the District is not proposing a change to the fee structure already established by current District rules. A source applying for a P SD permit, however, would already be required to submit an application for an Authority to Construct through the established District process, so the only additional fees would be the actual expenditures in issuing the PSD permit based on

a time and materi al basis.

The actual labor hours required to process the PSD permit are estimated to be approximately the same as for processing a Title V permit.

Proposition 26, Supermajority Vote to Pass New Taxes and Fees (2010)

Section 2 (d) of Article XIII C, Calif ornia Constitution reads:

“ No local government may impose, extend, or increase any special tax unless and until that tax is submitted to the electorate and approved by a two

- thirds vote. A special tax shall not be deemed to have been increased if it is imp osed at a rate not higher than the maximum rate so approved.”

This rule does not impose any new taxes nor increase any existing taxes, as implementation of the program would be conducted under the existing fee structure of the District.



### S OCIOECONOMIC 

### I MPAC T California Health and Safety Code § 40728.5 requires, in part, that:

“Whenever a district intends to propose the adoption, amendment or repeal of a rule or regulation that will significantly affect air quality or emissions limitations, that agency shall, to the extent that data are available, perform an assessment of the socioeconomic impacts of the adoption, amendment, or repeal of the rule or regulation.”

However, districts with a population of less than 500,000 persons are exempt from the provisions of CH&S § 40728.5 (a). The District’s population is estimated to be approximately
166,892 , below the 500,000 person threshold. Therefore, a socioeconomic analysis for this rulemaking is not required.



### C OST 

### E FFECTIVENESS OF A 

### C ONTROL 

### M EASURE California Health and Safety Code Section 40703 requires that all air quality districts consider and make public findings relating to the cost effectiveness of implementing an emission control

measure.

The proposed rule does not implement an emission contr ol measure and therefore is not subject

to t he cost effectiveness mandate. S taff does not anticipate an additional need for staff resources upon adoption of the rule.Staff Report Page 5 of 6

Regulation X; Rule 1 0.10 Prevention of Significant Deterioration



### 4.0 E NVIRONMENTAL 

### R EVIEW AND 

### C OMPLIANCE

The proposed adoption of Rule 10.1 0 consists of implementing existing federal requirements. As the District has not exercised discretion by modifying federal requirements, it is ministerial in nature and the proposed adoption of Rule 10.11 is statutorily exempt from CEQA pursuant to

Section 15268 of the state CEQA Guidelines.



### 5.0 R EQUIRED 

### F INDINGS

California Health and Safety Code Section 40727 (a) requires that prior to adopting or amending a rule or regulation, an air district’s board must make findings of necessity, authority, clarity,

consis tency, non

- duplication and reference. The findings must be based on the following:

1. Information presented in the District’s written analysis, prepared pursuant to CH&S §
40727.2;

2. Information contained in the rulemaking records pursuant to CH&S § 40728; and

3. Relevant information presented at the Board’s hearing for the rule.

The table below describes the finding and the basis for making the finding.

Table 5

. 1

FINDING FINDING DETERMINATION Necessity: The Distric t must find that the rulemaking demonstrates a need exists for the rule or for its amendment or repeal. (CH&S § 40727 (b)(1)) Rule 10.1 0 It is necessary for the District to adopt the proposed

rule in order to obtain approval from the EPA to issue

PSD permits, and reduce any expected delay in issuing new PSD permits. Authority: The District must find that a provision of law or of a state or federal regulation permits or requires the District to adopt, amend, or repeal the rule. (CH&S § 47027(b)(2)) Rule 10.10 The District is authorized to adopt rules and regulations by CH&S § 40001, 40702, and 42300.

Clarity: The District must find that the rule is written or displayed so that its meaning can be easily understood by the persons directly affected by it. (CH&S § 40727(b)(3)) Rule 10. 1 0 The District has reviewed the proposed rule and determined that they can be easily understood by the affected industry. In addition, the record contains no evidence that the persons directly affected by the rule

cannot understand the rule. Consistency: The rule is in harmony with, and not in conflict with or contradictory to, existing statutes, court decisions, or state or federal regulations. (CH&S § 40727(b)(4)) Rule 10. 1 0 The proposed rule does not conflict with an d are not contradictory to existing statutes, court decisions, or state or federal regulations.

Non

- Duplication: The District must find that either: 1) The rule does not impose the same requirements as an existing site or federal regulation; or 2) that the duplicative requirements are necessary or proper to execute the powers and duties granted to, and imposed upon the District. (CH&S § 40727(b)(5) Rule 10.1 0 The proposed rule incorporates by reference federal rules or regulations for permitting programs. The duplicative requirements are necessary in order to execute the powers and duties imposed upon the

District.Staff Report Page 6 of 6

Regulation X; Rule 1 0.10 Prevention of Significant Deterioration

FINDING FINDING DETERMINATION

Reference: The District must refer to any statute, court decision, or other provision of law that the District implements, interprets, or makes specific by adopting, amending or repealing the rule. (CH&S § 40727(b)(6)) Rule 10.1 0 The proposed rule is in tended to duplicate existing

law. References to statutes are noted where applicable

.



### 6.0 C OMPARISON WITH 

### O THER 

### A PPLICABLE 

### R EGULATIONS AND 

### R EQUIREMENTS

California Health and Safety Code Section 40727.2 requires districts to prepare a written analysis (may be i n the form of a matrix) that identifies all existing federal air pollution control requirements, including, but not limited to, emission control standards constituting BACT, that apply to the same equipment or source type as the rule or regulation proposed for adoption or modification by the District. In addition, the analysis shall identify any other District rule or regulation that applies to the same equipment or source type.

Rule 10.10 has been prepared by CAPCOA to incorpora te the federal requirement s of PSD by

reference.



### 7.0 P UBLIC 

### N OTICE

The notice for this rule adoption was ma iled to all permitted sources and a notice of the hearing was published in the Appea l Democrat on June 30, 2011

.

A public workshop was held on July 12, 2011 . A notice of the workshop was mailed to all permitted s ources and interested parties. No members of the public attended the workshop. No

comments were received.

The proposed rule was se n t to the Air Resources Board and the Environmental Protection Agency on June 15, 2011. No comments were received from EPA or ARB.

### ATTACHEMENT A :

P ROPOSED 

### T EXT OF 

### R EGULATION 

### X: R ULE 

### 10.1 0: P REVENTION OF 

### S IGNI FICANT


### D ETERIORATIO N