629 EntlerAvenue , Suite 15 Chico , CA 95928 (530) 332

-9400 (530) 332-9417 Fax



### Gerardo Rios Chief, Air Permits Office (Air-3) EPA Region 9 75 Hawthorne Street San Francisco, CA 94105 November 13 , 2014 

### · w. James Wagoner AirPollution Control Officer Robert McLaughlin Asst.Air Pollution Control Officer



### RE: Clarifications for Rule 1107

- Prevention of Significant Deterioration (PSD) Permits
Dear Mr. Rios:
On February 6, 2013, the California Air Resources Board (CARB) submitted for the Environmental Protection Agency 's (EPA) approval Butte County Air Quality Management District (District) Rule 1107

- Prevention of Significant Deterioration (PSD) Permits. This letter provides additional information and clarifications related to greenhouse gas permitting requirements, transferring the PSD program from EPA to the District and ensuring that certain PSD program requirements are met. 

### Clarification Regarding Greenhouse Gas Requirements On June 23, 2014, the Supreme Court issued it s opinion in Utility Air Regulatory Group v. Environmental Protection Agenc y 

### (No. 12-1146) ("UARG ") 

### that EPA may not treat greenhouse gases (GHGs) as an air pollutant for purposes of determining whether a source is a major source (or modification thereof) required to obtain a PSD permit (referred to as " Step 2 of the GHG Tailoring Rule ")

. The Supreme Court also said that EPA could continue to require that PSD permits, otherwise required based on emissions ofconventional pollutants, contain limitations on GHG emissions based on the application ofBACT. District Rule 1107, Section 3 incorporates by reference EPA's PSD regulations at 40 CFR 52.21 as ofAugust 1, 2011. In light ofthe Supreme Court's UARG 

### decision, on November 12, 2014, I requested that ARB notify EPA that ARB and the District would like to withdraw from ARB 's April 22, 2013 SIP submittal the portion of District Rule 1107 that incorporates by reference 40 CFR 52.21(b)(49)(v). This withdrawal is designed to ensure that EPA can act on the Di strict' s SIP submittal consistent with the Supreme Court's UARG 

### decision concerning Step 2 of the GHG Tailoring Rule. The District understands that BPA will need to make revisions to 40 CFR 52.21 as a result ofthe UARG 

### decision and the associated remand process that is still ongoing. In the interim, the Di strict intends to apply 40 CFR 52.21 as incorporated by reference into District Rule 1107 , Section 3 in manner that is consistent with EPA's interpretation of the Supreme Court's deci sion and EPA guidance and policy with respect to application ofsection 52.21 while revisions to the regulations are pending.Mr. Gerardo Rios , EPA November 13, 2014
Existing PSD Permits As part of, and concurrent with, EPA ' s approval ofthe District's PSD program into the SIP, the District is requesting approval to exercise its authority to administer the PSD program with respect to those sources located in the District that have existing PSD permits issued**pursu~t** by EPA. This would include authority to conduct general administration of these existing permits, authority to process and issue any and all subsequent PSD pennit actions relating to such permits including, for example, modifications, amendments , or revisions of any nature, and authority to enforce such permits.
Discussion of Section 110( a)(2)(E)(i) Pursuant to Section l 10(a)(2)(E)(i) of the Clean Air Act, we discuss how the information provided previously and State and District statutory and regulatory requirements demonstrate that the District has adequate personnel, funding , and authority under State and/or local law to implement the PSD program within the District.
The District has the primary responsibility for regulating air pollution from all stationary sources within the District (see California Health & Safety Code (H&SC) sections 39002 and 40000). The California Air Resources Board oversees the District' s activities and regulates mobile sources of air pollution. Under State law, the District is required to adopt rules to achieve ambient air quality standards and to enforce the provisions oflocal , State and federal air quality laws (see H&SC section 4000l(a)).
The District's permitting program (which is authorized by H&SC section 42300 and must meet the requirements of section 42301), as approved by EPA, currently implements requirements from both the California and federal Clean Air Acts. The District is authorized by state law to enforce its rules, regulations and orders , including conditions contained in District-issued Title V and PSD pennits (see H&SC §§ 40752(b); 41513 ; 42402-42403). Rule 1107 provides the District with specific authority to issue PSD permits and otherwise implement and enforce the PSD program. As discussed in the District's February 6, 2013 SIP submittal, Rule 1107 will have an additional impact on businesses that are proceeding with a new major source or a major modification of an existing major source within the District. The District will incur costs to process PSD pennitting actions and will transfer those costs to the source. The District also adopted a PSD fees rule

- Rule 515

- which imposes an initial filing fee and then charges actual expenditures in issuing a

· permit on a time and material basis. California districts have estimated the actual labor hours required to process a PSD pe1mit to be approximately the same as for processing a title V pe1mit. For title V pennits, the District advises that the time required is 70 hours. However, this could vary considerably depending on the level of public and EPA participation in the process. This would equate to a permit fee of about $5 ,500 at the District's hourly rate of $79.75. The initial filing fee is set at $1,000 and is expected to cover the costs ofpre-permitting consulting.
The above inforn1ation shows that the District has adequate legal authority, personnel and funding to implement and enforce the PSD program for sources within the District, including those with existing PSD permits.

T:\Source Programs'1 PSD Pe11nitting\GHG SIP Revi sions\PSD SIP C latification Letter Butte Cty AQMD 11132014

.docxMr. Gerardo Rios, EPA November 13, 2014



### Additional PSD Program Requirements


### Notice of Opportunity.for Public Hearing 40 CFR 51.166(q)(iii) states: 

### Notify the public, by advertisement in a newspaper of general circulation in each region in which the proposed source would be constructed, of the application, the preliminary determination, the degree ofincrement consumption that is expectedfrom the source or modification, and ofthe opportunity for comment at a public hearing as well as written public comment. 40 CFR 51.166( q)(iii) requires that the public notification for a preliminary determination include notice of the opportunity for comment at a public hearing. While Section 5.5 of Rule 1107 includes the requirement in 40 CFR 51.166(q)(2)(v) to provide an opportunity for a public hearing, Rule 1107 does not specifica lly include the requirement to 

### notify the public of the opportunity to comment at a public hearing. Section 5.3 ofRule 1107 includes the requirements in 40 CFR 51.166(q)(iii) related to public notifications except for a reference to the opportunity for comment at a public hearing

. While Section 5

.5 ofRule 1107 requires the District to provide an opportunity for a public hearing it is not clear from Rule 1107 that the notice to the public must mention the opportunity to request a public hearing. The District confirms that it interprets Section 5 ofRule 1107 as requiring the public notification to include reference to the opportunity to request a public hearing. The District will ensure that its public notifications mention the opportunity to request a public hearing, and revise Rule 1107, for clarity, to specifically include this requirement the next time it is open for revisions. If you have any questions or need additional clarification regarding this correspondence, please contact me at (530) 332-9400, extension 112. Sincerely, 

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Air Pollution Control Officer

T:\Sour ce Programs\PSD Pennitting \GHG SIP Revisions\PSD SlP C larification Let1er Butte Cty AQMD 11 132014

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