629 Entler Avenue, 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 

Air Pollution 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 its opinion in Utility Air Regulatory Group v. 

Environmental Protection Agency (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 of conventional pollutants, contain limitations on 

GHG emissions based on the application of BACT. District Rule 1107, Section 3 incorporates by 

reference EPA's PSD regulations at 40 CFR 52.21 as of August 1, 2011. In light of the 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 District's SIP submittal consistent with the Supreme 

Court's UARG decision concerning Step 2 of the GHG Tailoring Rule. The District understands 

that BP A will need to make revisions to 40 CFR 52.21 as a result of the UARG decision and the 

associated remand process that is still ongoing. In the interim, the District 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 decision and EPA guidance and 

policy with respect to application of section 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 of the 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 of local, 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 of pre-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'1PSD Pe11nitting\GHG SIP Revisions\PSD SIP Clatification Letter Butte Cty AQMD 11132014.docx 
Mr. 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 of increment consumption that is expected from the source or 

modification, and of the 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 specifically include the requirement to notify the public of the 

opportunity to comment at a public hearing. Section 5.3 of Rule 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 of Rule 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 of Rule 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, 

w!fZ: 

Air Pollution Control Officer 

T:\Source Programs\PSD Pennitting\GHG SIP Revisions\PSD SlP Clarification Let1er Butte Cty AQMD 11 132014.docx