United States Environmental Protection Agency, Region 9

Air Division

Technical Support Document

for

EPA's Notice of Final Rulemaking

for R evisions to the

California State Implementation Plan

Eastern Kern Air Pollution Control District

Rule 210.4

– Prevention of Significant Deterioration

Imperial County Air Pollution Control District

Rule 904

– Prevention of Significant Deterioration (PSD) Permit Program

Placer County Air Pollution Control District

Rule 518

– Prevention of Significant Deterioration (PSD) Permit Program

Yolo

- Solano Air Quality Management District

Rule 3.24

– Prevention of Significant Deterioration

Prepared by Lisa Beckham

Reviewed by Gerardo Rios

Se ptember 21

, 201 2Table of Contents

Section Page

1. Introduction 1

2. PSD Program SIP Revision Submittal 1

3. What are the General Requirements of a SIP

- Approved PSD Program? 2

4. Rule Summary 3

5. Rule Evaluation 6

6. Program Transfer and Implementation Issues 2 3

7. Section 110(a), 110(l)

, and 193 of the Act 2 5

8. Recommendations 2 5

9. Attachments 2 5Page 1 of 2 5 1. Introduction

Part C of title I of the Clean Air Act (CAA or Act) contains the provisions for the Prevention of Significant Deterioration (PSD) of air quality in areas designated as “attainment” or “unclassifiable” for the national ambient air quality standards (NAAQS). Part D of title I of the Act contains the requirements for areas designated “nonattainment” for any NAAQS. Both parts C and D of the Act require pre

- construction permit programs for certain new or modified stationary sources of pollutants. The PSD require ments under part C apply to certain new or modified sources that would be located within attainment areas, and apply to all “regulated NSR pollutants,” except those pollutants for which an area has been designated as “nonattainment.” The requirements

under part D, referred to as “Nonattainment New Source Review,” apply to certain new or modified sources of nonattainment pollutants located in nonattainment areas. Collectively, the

pre

- construction permit requirements related to PSD and Nonattainment New Sour ce Review are simply referred to as “New Source Review” or “NSR.” Both of these programs apply to “major stationary sources” and “major modifications” as those terms are defined in Title 40 of the Code of Federal Regulations (CFR) Part 51, Subpart I. In ad dition to the regulation of major stationary sources, states are also required to adopt a program to provide for the regulation of the construction and modification of minor stationary sources and minor modifications at major sources, to assure

that the NA AQS are achieved and/or maintained. These pre

- construction program requirements are commonly referred to as “minor NSR” (see 40 CFR 51.160

- 164). This technical support document (TSD) specifically addresses the requirements of Part C of title I of the Act a nd the implementing regulations at 40 CFR 51.166 governing PSD programs in State Implementation Plans (SIPs).

2. PSD Program SIP Revision Submittal s

The following rules were adopted or amended by l ocal permitting agencies within California (see

Attachment 1 ) :

• Eastern Kern Air Pollution Control District (Eastern Kern or EKAPCD)

– Rule 210.4

– Prevention of Significant Deterioration

, amended January 12, 2012

• Imperial County Air Pollution Control District (Imperial or ICAPCD)

– Rule 904

– Prevention of Signifi cant Deterioration (PSD) Permit Program , amended December 20,

2011

• Placer County Air Pollution Control District (Placer or PCAPCD)

– Rule 518

– Prevention of Significant Deterioration (PSD) Permit Program , adopted February 10, 2011

• Yolo

- Solano Air Quality Management District (Yolo

- Solano or YSAQMD)

– Rule 3.24

– Prevention of Significant Deterioration , adopted June 13 , 2012

In letter s dated June 21, 2011, February 23, 2012, April 25, 2012, and July 3, 2012 , the California

Air Reso ur ces Board (ARB) submitted rule package s for the rules listed above to Region 9 of the United States Environmental Protection Agency ( EPA ) as revision s to California’s SIP. The ARB

is the California governor’s designee for submitting official revisions of t he California SIP to the

EPA. The se District s currently do not have SIP

- approved PSD program s as required by p art C of

title I of the Act and 40 CFR 51.166

. EPA’s approval of ARB’s SIP submittal package s into thePage 2 of 2 5 California SIP would transfer authority and responsibility for implementation of the PSD permitting program from EPA to the Districts

.

During our review process, EPA requested that the District s provide certain clarifications regarding t he submitted PSD rules and how the District s would implem ent its rules to ensure that

each PSD program satisfies the requirements of 40 CFR 51.166 for PSD programs. The letter s also requested that the District s provide further confirmation and explanation concerning (1) the District’s authority, per sonnel, and funding to implement the PSD program within the District pursuant to Clean Air Act Section 110(a)(2)(E)(i), and (2) , if applicable, the District’s request to implement the PSD program with respect to exis ting PSD permits issued by EPA

. The Dist rict s subsequently provided the requ ested information (see Attachment s 2 and 5 ).

The SIP submittal package s for these PSD rules were reviewed and determined complete according to Appendix V of 40 CFR Part 51

.

3. What are the General Requirements of a SIP

- Approved PSD Program ?

The PSD program is a preconstruction review and permitting program applicable to certain new major stationary sources and major modifications at existing major stationary sources. The specific requirements applicable to SIP

- app roved PSD programs are contained in 40 CFR 51.166. The PSD program applies to any regulated NSR pollutant (as defined in 40 CFR 51.166), except for pollutant s designated nonattainment for a NAAQS. The CAA defines “nonattainment areas” as air quality planni ng areas that exceed the national primary or secondary NAAQS for a given criteria pollutant (or that contribute to ambient air quality in a nearby area that does not meet the NAAQS). In some instances the emission increases of a particular pollutant may be subject to the PSD program and the Nonattainment NSR program. For example, nitrogen oxides ( NO

x ) from a source in an area designated as attainment for the nitrogen dioxide ( NO 2 ) NAAQS and nonattainment for the ozone NAAQS would be subject to both permitti ng programs because NO

x would be a PSD pollutant as well as a precursor to ozone, a nonattainment pollutant

.

The applicability of PSD to a particular source must be determined in advance of construction or modification and is pollutant

- specific. The primary criteri on is whether the proposed project is sufficiently large (in terms of its emissions) to be a major stationary source or major modification,

both of which are described below.

Section 169 of the CAA specifies the emissions threshold, depend ing on source category, which is used to determine whether a source is a “major emitting facility” and subject to PSD. For PSD purposes, a “major stationary source” is any source belonging to a specified list of 28 source categories 1 that emits or has the potential to emit (PTE) 100 tons per year (tpy) or more of any air pollutant subject to regulation under the CAA, or belonging to any other source category that emits

or has the PTE for such pollutants in amounts equal to or greater than 250 tpy. A new source with

a PTE at or above the applicable “major stationary source threshold” is subject to PSD for any other regulated NSR pollutant emitted in “significant” amounts. Significance levels, which EPA

1 See 40 CFR 51.166(b)(1)(i) for the 28

- source category list.Page 3 of 2 5 has promulgated for criteria pollu tants and certain other pollutants, represent a threshold for a de minimis contribution to air quality problems. When EPA has not set a significance level for a pollutant, PSD applies to an increase of the regulated pollutant in any amount (that is, in eff ect, the significance level is treated as zero).

PSD also applies to existing sources that undertake a “major modification,” which occurs when: (1) there is a physical change, or change in the method of operation, at a “major stationary source;” (2) the c hange results in a “significant” emissions increase of a pollutant subject to PSD regulation (at or above the significance level that EPA has set for the pollutant); and (3) there is a “significant net emissions increase” of a pollutant subject to PSD regu lation that is at or above the significance level (as defined in 40 CFR 51.166(b)(23)).

On January 2, 2011, greenhouse gases (GHG s ) became subject to regulation under the CAA

. EPA adopted new provisions in 40 CFR 51.166 and 40 CFR 52.21 to tailor the ap plicability criteria that determine which sources would become subject to permitting requirements for GHG emissions under the PSD and title V programs of the CAA, known as the “Tailoring Rule” (s ee 75 FR 31514). The Tailoring Rule revised the definition of “subject to regulation” in 40 CFR 51.166(b)(48) and 40 CFR 52.21(b)(49) to establish specific emission thresholds that determine when GHGs are considered subject to regulation and therefore subject to PSD permitting requirements. The emission thresholds f or GHGs are:

1. For a new stationary source,

a. A PTE of at least 100,000 tpy of CO 2 equivalent emissions (CO 2 e), OR

b. An emission increase of 75,000 tpy or more of CO 2 e at a source that is a new major stationary source for a pollutant other than GHGs.

2. For an e xisting stationary source,

a. An emission increase of 75,000 tpy or more of CO 2 e at a source that has a PTE of at least 100,000 tpy of CO 2 e, OR

b. A significant emissions increase of any pollutant other than GHGs and an increase of 75,000 tpy or more of CO 2 e.

4. Rule Summar ies

4.1. Eastern Kern Rule 210.4

Rule 210.4

– Prevention of Significant Deterioration applies to pollutants designated as attainment

or unclassifiable in the EKAPCD , as well as to other regulated NSR pollutants . H owever,

c onsistent with the require ments for a PSD program

, Rule 21 0 .4 does not apply to pollutants in areas that are designated as nonattainment. Currently, Eastern Kern is designated either attainment

or unclassifiable for the par ticulate matter 2.5 micrometers in diameter and smaller ( PM 2.5 ), NO 2 , sulfur dioxide ( SO 2 ), carbon dioxide ( CO ) , and lead NAAQS

, and a portion of the district is designated nonattainment for the ozone and particulate matter 10 micrometers in diameter and smaller ( PM 10 ) NAAQS. The EK APCD does not take any credit in its attainment plans for ozone

and PM 10 for any emission reductions achieved as part of these PSD regulations.Page 4 of 2 5 Eastern Kern Rule 210.4 essentially incorporates by reference the federal PSD program as codified in 40 CFR Part 52.21, which is the Federal Im plementation Plan (FIP) used by EPA to implement the required PSD program in areas that do not have a SIP

- approved PSD program. Rule 210.4 is comprised of seven sections:

Section I

– Purpose

Section II

– Definitions

Section III

– Applicability

Section I V

– Incorporation by Reference

Section V

– Exemption

Section VI

– Requirements

Section VII

– Public Participation

Section I outlines the purpose of the rule, which is to implement the PSD program by incorporating the federal PSD program by reference. With some revisions, Section II incorporates by reference the definitions in 40 CFR 52.21(b)

. Section III includes applicability provisions and provides that

any source
, and owner/operator of any source

, subject to any requirement in 40 CFR 52.21, as

incorporated into this rule, is subject to Rule 210.4. With some revisions and exceptions, Section

IV incorporates by reference the provisions of 40 CFR Part 52.21 as of January 12, 2012 . Section V provides an exemption from conduct ing an air quality analys is for GHGs . Section VI identifies the requirements necessary to administer the program , including the requirement to obtain a PSD permit prior to beginning actual construction of a major stationary source or a major modification

. Section VII contains the pu blic noticing requirements for issuing a PSD permit.

4.2. Imperial Rule 904

Rule 904

– Prevention of Significant Deterioration (PSD) Permit Program applies to pollutants designated as attainment or unclassifiable in the ICAPCD , as well as to other regulated NSR pollutants . However, c onsistent with the requirements for a PSD program

, Rule 904 does not apply

to pollutants in areas that are designated as nonattainment. Currently, the District is designated

either attai nment or unclassifiable for the NO 2 , SO 2 , CO , and lead NAAQS . The District is designated as nonattainment for the ozone and PM 10 NAAQS and a portion of the D istrict is designated nonattainment for the PM 2.5 NAAQS. The IC APCD does not take any credit in its attainment plans for ozone , PM 10 and PM 2.5 for any emission reductions achieved as part of these PSD regulations.

Imperial Rule 904 essentially incorporates by reference the federal PSD program as codified in 40 CFR Part 52.21, which is the FIP used by EPA to implement the required PSD program i n areas that do not have a SIP

- approved PSD program. Rule 904 is comprised of six sections:

Section A

– Purpose

Section B

– Applicability

Section C

– Incorporation by Reference

Section D

– Definitions

Section E

– RequirementsPage 5 of 2 5 Section F

– Public Particip ation

Section A outlines the purpose of the rule, which is to implement the PSD program by incorporating the federal PSD program by reference. Section B provides that any source, and the owner/operator of any source, subject to any requirement in 40 CFR 5 2.21, as incorporated into this rule, is subject to Rule 904. With some exceptions, Section C incorporates by reference the provisions of 40 CFR Part 52.21 as of December 20, 2011

. With some revisions, Section D incorporates by reference the definitions in 40 CFR 52.21(b)

. S ection E identifies the requirements necessary to administer the program , including the requirement to obtain a PSD permit prior to beginning actual construction of a major stationary source or a major modification

. Section F

contains th e public noticing requirements for issuing a PSD permit.

4.3. Placer Rule 518

Rule 518

– Prevention of Significant Deterioration (PSD) Permit Program applies to pollutants designated as attainment or unclassifiable in the P CAPCD , as well as to other regulate d NSR pollutants

. However, c onsistent with the requirements for a PSD program

, Rule 518 does not apply

to pollutants in areas that are designated as nonattainment. Currently, the District is designated

either attainment or unclassifiable for the PM 10 , NO 2 , SO 2 , CO, and lead NAAQS

, and a portion of

the district is designated nonattainment for the ozone and PM 2.5 NAAQS. The P C APCD does not take any credit in its attainment plans for ozone and PM 2.5 for any emission reductions achieved as part of these PSD regulations.

Placer Rule 518 essentially incorporates by reference the federal PSD program as codified in 40 CFR Part 52.21, which is the FIP used by EPA to implement the required PSD program in areas that do not have a SIP

- approved PSD program. Rule 518 is comprised of four sections:

Section 100

– General

Section 200

– Definitions

Section 300

– Standards

Section 400

– Administrative Requirements

Section 100 contains the purpose and applicability of Rule 518, which is to adopt a PSD program by incorporating by reference the federal PSD program in 40 CFR 52.21 and to apply Rule 518 to

any source
, and the owner or operator of any source

, subject to any requirement under 40 CFR 52.21, as incorporated into Rule 518

. Section 100 also incorporates 40 CFR 52.21, as of February 10, 2011, into Rule 518 and exempts GHGs from air quality analyses. Section 200 revises some of

the definitions and terms in 40 CFR 52.21, as incorporated by reference in Rule 518. Section 300 identifies the requirements necessary to administer the program , including the requirement to

obtain a PSD permit prior to beginning actual construction of a major stationary source or a major

modification

. Section 400 contains the public participation requirements for issuing a PSD permit

.Page 6 of 2 5 4.4. Yolo

- Solano Rule 3.24

Rule 3.24

– Prevention of Significant Deterioration applies to pollutants designated as attainment

or unclassifiable in the YSAQMD , as well as to other regulated NSR pollutants

. However,

c onsistent with the requirements for a PSD program

, Rule 3.24 does not apply to pollutants in areas that are designated as nonattainment. Currently, the District is either attainment or

unclassifiable for the PM 10 , NO 2 , SO 2 , CO, and le ad NAAQS and a portion of the YSAQMD is

nonattainment for the ozone and PM 2.5 NAAQS. The YSAQMD does not take any credit in its attainment plans for ozone and PM 2.5 for any emission reductions achieved as part of these PSD regulations.

Yolo

- Solano Rule 3 .24 essentially incorporates by reference the federal PSD program as codified in 40 CFR Part 52.21, which is the Federal Implementation Plan (FIP) used by EPA to implement the required PSD program in areas that do not have a SIP

- approved PSD program. Rule 3.24 is comprised of four sections:

Section 100

– General

Section 200

– Definitions

Section 300

– Standards

Section 400

– Administrative Requirements

Section 100 contains the purpo se and applicability of Rule 3.24 , which is to adopt a PSD program by incorporating by reference the federal PSD program in 40 CFR 52.21 and to apply Rule 3.24 to any source and the owner or operator of any source subject to any requirement under 40 CFR 52.21, as incorporated into Rule 3. 24

. Section 100 also incorporates 40 CFR 52.21, as of June 13, 2012, into Rule 3.24 and exempts GHGs from air quality analyses. Section 200 revises some of the

terms in 40 CFR 52.21, as incorpor ated by reference in Rule 3.24

. Section 300 identifies the

req uirements necessary to administer the program , including the requirement to obtain a PSD permit prior to beginning actual construction of a major stationary source or a major modification

. Section 400 contains the public participation requirements for issu ing a PSD permit.

5. Rule Evaluation s

We reviewed the SIP submittals for each rule to ensure that they meet the requirements of title I of the Act, specifically part C (sections 160 through 169B), and current implementing regulations at

40 CFR 51.166. EPA has condensed the approval criteria contained in these various materials in

this TSD , which describes the basis for our proposed action on the rule submittal s

.

The Act requires all states to submit a PSD program consistent with the requirements of 40 CFR

51.166. EPA’s detailed evaluation of these rules and how they meet the r equirements for a PSD

program are included in the attached document s: Evaluati on of 40 CF R 51.166 and Rule 210.4 for

the Eastern Kern County APCD ( Eastern Kern Evaluation)

, and Evaluation of 40 CFR 51.166 and

Rule 90 4 for the Imperial County APCD , Rule 518 for the Placer County APCD, and Rule 3.24 for

the Yolo

- Solano AQMD ( Imperial, Placer, an d Yolo

- Solano Evaluation) (see Attachment s 3 and 4) . In general, these rules meet the requirements of 40 CFR 51.166 by incorporating by referencePage 7 of 2 5 the specific provisions of 40 CFR 52.21 that are necessary to implement a state PSD program. As

mentioned abov e, 40 CFR 52.21 contains the FIP used by EPA to implement the required PSD program in areas that do not have a SIP

- approved PSD program. EPA considers the provisions of 40 CFR 52.21 to generally be consistent with the requirements of 40 CFR 51.166. Therefo re, only those provisions of each rule that warrants additional review and discussion are discussed below.

5.1. Eastern Kern Rule 210.4

– Prevention of Significant Deterioration

5.1.1. Background

On December 30, 2002, EPA published a final rulemaking action to provide additional flexibility in the permitting of modified source s subject to the federal major source NSR and PSD programs

. To implement these changes revisions were made to 40 CFR 51.165, 40 CFR 51.166 and 40 CFR

52.21 and are generally referred to as the “ NSR Reforms” (see 67 FR 80186 )

. EPA’s intent was to allow existing sources additional flexibility in the NSR/PSD permitting process that would encourage facilities to make process improvements or undertake energy efficiency projects that would provide additional environmental benefits by reducing emissions on a capacity basis. These provisions all pertain to how emission increases from proposed modifications of existing sources

are calculated.

In 2003, the California Legislature passed Senate Bill 2 88, Protect California Air Act of 2003 (SB 288). SB 288 is intended to prevent local air district programs from implementing the NSR

Reforms. The bill prohibits a district from adopting changes to a district’s NSR rule or PSD program that are considered, b y California, to be less stringent than such a program was on

December 3 0 , 2002. Eastern Kern’s previous version of Rule 210.4 was amended and submitted to EPA for inclusion in the SIP in 1999. Although Rule 210.4 was never approved by EPA into the SIP, it was submitted for approval and, thus

, according to ARB, must comply with SB 288. It is not EPA’s interpretation that the District must comply with SB 288, which is a matter of state law, in order for EPA to approve EKAPCD’s PSD program.

We note that bec ause of existing local NSR rule requirements in EKAPCD

, it is generally unlikely

that sources located with in the District would be subject to different control requirements even if

EKAPCD were able to adopt the NSR Reforms. With a few exceptions, EKAPCD’s current local NSR rule requires BACT for each modification to an emission s unit that result s in an emissions increase (EKAPCD Rule 210.1). This rule has been submitted to EPA for approval into the SIP but EPA has not yet taken action on it. However, becaus e of SB 288, it is unlikely the District could remove this requirement from its rules.

As required by 40 CFR 51.166(a)(7)(iv), Eastern Kern’s Final Staff Report for Rule 210.4 contains a demonstration that the applicability provisions and definitions of R ule 210.4 are at least as stringent as those found in 40 CFR 51.166.

As discussed in the Final Staff Report, the NSR Reforms made five major changes to 40 CFR

51.166 and 40 CFR 52.21:Page 8 of 2 5 1. Allowing a 10

- year look

- back for establishing emissions baseline (or 5 years for electric steam generating units)

2. Revised calculation methods for emissions increases

– allowing an actual

- to

- projected

actual test in addition to the actual

- to

- potential test and providing that a project must cause a significant emissions incre ase in addition to a significant net emissions increase

3. Allowing Actuals Plantwide Applicability Limits (PALs)

4. Pollution Control and Prevention Projects

5. Clean Unit Provisions

The last two features of the 2002 NSR Reforms described above were vacated by th e U.S. Court of Appeals for the District of Columbia in State of New York, et al., v. U.S. Environmental Protection Agency, et al., 413 F.3d 3 (D.C. Cir. 2005), and are no longer a part of the PSD program.

5.1.2. Eastern Kern APCD Approach to the PSD Program

T o comply with SB 288, the District incorporated 40 CFR 52.21 by reference into Rule 210 .4 and

then included additional language in Rule 210.4 that revises the applicability provisi ons in corporated by reference from 40 CFR 52.21(a)(2) and the definitions of major modification, baseline actual emissions, actual emissions, and net emissions increase in corporated by reference

from 40 CFR 52.21(b)

. EKAPCD Rule 210.4 also excludes the a ctu als PALs provisions contained in 40 CFR 52.21(aa). Rule 210 .4 also differs from 40 CFR 52.21 in other respects not directly

related to SB 288 or the NSR Reforms , as explained below

.

W e have considered the specific provisions of EKAPCD’s PSD rule that differ from the federal PSD rules in order to ensure that, with these differences, the rule is at least as stringent as the requirements of the Federal PSD program. Below

, we provide our a nalysis that Rule 210.4 is at least as stringent, in all respects, as the requirements of 40 CFR 51.166 for a PSD program

.

5.1.3. Exclusions

Sec tion IV.B of Rule 3.24 excludes the following paragraphs from its incorporation by reference

of 40 CFR 52.21:

• (a)(1 )

– Plan disapproval

• (b)(55

- 58) and (cc)

– equipment replacement program (ERP) provisions which were vacated by the United States Circuit Court of Appeals for the District of Columbia on March 17, 2006

• (g)

– Redesignation

• (i)(1)(i

- v, ix

- x) and (i)(6

- 8)

– Exemptions

• (p)(6

- 8)

– Class I variances by the Governor

• (q)

– Public participation

• (s)

– Environmental impact statements

• (t)

– Disputed permits or redesignations

• (u)

– Delegation of authority

• (v)

– Innovative control technologyPage 9 of 2 5 • (w)

– Permit rescission

• (aa)

– Actuals PALs

• (f), (x), (y), and (z)

– “[Reserved]”

EPA has reviewed these exclusions and, except for paragraph (q)

– Public participation , concurs that these excluded paragraphs are not necessary to implement a state PSD program. A

SIP

- approved PSD pr ogram is required to include certain public participation requirements found in 40 CFR 51.166(q). In lieu of the public participation requirements found in 40 CFR 52.21(q),

Eastern Kern has specified the applicable requirements in Section VII of Rule 210.4

. The public participation requirements are further discussed in Section 5.1.5 of this TSD.

Also, see Section 5.1.6 for an additional discussion of the rule’s exclusion of actuals PALs.

5.1.4. Applicability Provisions

Pursuant to 40 CFR 51.166(a)(7)(iv), e ach PSD program must use the specific provisions of paragraphs (a)(7)(iv)( a ) through ( f

) of 40 CFR 51.166 for determining whether a project is a major modification and subject to the PSD program. Analogous provisions are contained in the FIP at 40

CFR 52.2 1(a)(2). Deviations from these provisions will be approved only if a State specifically demonstrates that the submitted provisions are more stringent than

, or at least as stringent

, in all respects as the corresponding provisions in paragraphs (a)(7)(iv)( a ) through ( f

) of 40 CFR 51.166.

See 40 CFR 51.166(a)(7)(iv) . Although Rule 210.4 incorporates 40 CFR 52.21 by reference,

Section III of Rule 210.4 replaces some of the applicability provisions, and references to them, with a different set of provisions. Th ese resulting provisions only affect how the PSD program applies to modifications of existing emission units. We have determined that all other applicability provisions are the same as those in 40 CFR 51.166(a)(7).

5.1.4.1. Major Modification Applicability Provisi ons in 40 CFR 51.166

The applicability provisions of 40 CFR 51.166(a)(7)(iv)( a ) through ( f

) relate to determining whether a project at an existing major stationary source is considered a major modification. T he se applicability provisions do this using a two

- step process. The first step is to determine whether any of the emissions increases associated with the project are considered a “significant emissions increase”, as that term is defined in 40 CFR 51.166(b)(39). A significant emissions increase is calculated based on the type of unit being modified: (1) for projects that involve existing emission units, an actual

- to

- projected

- actual applicability test is used; (2) for modifications that involve construction of new emissions units, an actual

- to

- p otenti al applicability test is used; and (3) for projects that involve both existing emission units and construction of new emissions units, a hybrid test is used, using the tests specified above for new or existing emission units, as applicable . If the

pr oject does not cause a significant emissions increase, then the project does not result in a major

modification.

If the project results in a significant emissions increase, then the second step applies and it must be determined whether the project also re sults in a “significant” “net emissions increase”, as thosePage 10 of 2 5 two terms are defined in 40 CFR 51.166(b). A project results in a major modification only if it

causes both a significant emissions increase and a significant net emissions increase.

5.1.4.2. Major Modifi cation Applicability Provisions in Rule 210.4

The major modification applicability provisions in Section III of Rule 210.4 vary from those

de scribed above because t he provisions do not require that the particular project cause a significant

emissions incr ease in order to be considered a major modification or require that a particular “test”

be used for calculating emission changes

. Instead

, projects that meet Rule 210.4’s definition of major modification are subject to the requirements of Rule 210. 4.

Rule 210.4’s definition for “major modification” governs the rule ’ s applicability provisions

because it defines a major modification as a modification that results in a “ significant ” “ net
emissions increase ”, as those terms are defined in Section II.F of Rule 210.4 . This is different from

the two

- step process in 40 CFR 51.166(a)(7)(iv) because it uses only the second step. That is, a project does not have to first cause a significant emissions increase in order to be a major modification. For each project, an o wner or operator must determine whether the project will result

in a “ significant ” “ net emissions increase ” looking at the entire stationary source , regardless of whether the project itself causes emission increases above or below the “significant” thresho lds. We find this difference acceptable and at least as stringent in all respects as the two

- step process in 40 CFR 51.166(a)(7)(iv).

The other substantive difference in Rule 210.4’s applicability procedures, as compared with the procedures in 40 CFR 51.1 66, is how emission increases from a modified emissions unit are

calculated

. 40 CFR 51.166 requires an actual

- to

- projected actual “ test ’ for modificat ions to existing equipment. As part of this test, “p rojected actual emissions ”, as defined in 40 CFR

51.16 6(b)(40), are the emission increases above the baseline that are calculated to reflect expected normal operating conditions (such as consideration of historical operational data, the company’s own representations, the company’s highest projections of expec ted business activity, or emissions the modified unit could have accommodated that are unrelated to the project , see 40 CFR 51.166(b) (40) (ii) ). In lieu of projecting actual emissions , 40 CFR 51.166 (b) (40) (ii)( d ) also allows

emission increases to be calculated using the new PTE of the unit , which is the same as using the

actual

- to

- potential test required for new units in 40 CFR 51

. 166(a)(7)(iv).

Rule 210.4 calculates e mission increases using the definition of “net emissions increase”. This

def inition does not specifically reference the “actual

- to

- potential” test , but w e have determined

that the rule’s applicability procedures a long with its definitions of major modification, actual emissions, and net emissions increase results in a calculation method that is the same as the

“actual

- to

- potential” test ; that is

, emission increase s are always based on the PTE of the new or modified emissions unit . The EKAPCD also confirmed this in the Final Staff Report for Rule 210.4 (see Final Staff Report at page D

- 2, Calculating Emission Increases). This method is consistent with what is already required for new emissions units under 40 CFR 51.166(a)(7)(iv) and specifically allowed for existing units in the definition for projected actua l emissions. We find these procedures acceptable and at least as stringent, in all respects as the applicability provisions of 40 CFR 51.166(a)(7)(iv) for modifications.Page 11 of 2 5 The definitions of major modification, actual emissions, baseline actual emissions, and net

emissions increase are discussed in more detail below in Section 5.1. 5 of this TSD.

5.1.4.2.1. Treatment of Fugitive Emissions for Major Modifications

The applicability provisions in Section III of Rule 210.4 and the definition of major modification

in Sec tion II of Rule 210.4 state that fugitive emissions are not included in determining whether a stationary source or modification are considered major, unless the source belongs to one of the sources categories listed in 40 CFR 52.21(b)(1)(iii). This require ment is consistent with the exemption provided in 40 CFR 51.166(i)(1)(ii) which provides an exemption from the PSD

program requirements if the source or modification would be a major stationary source or major modification only if fugitive emission s are co nsidered in the potential to emit of the source or modification. We find this acceptable because Rule 210.4 only determines whether a stationary

source or modification is major using the potential to emit of the new or modified source, whereas

40 CFR 51.16 6 (a)(7) allows modified units to use projected actual emissions

.

5.1.4.3. Conclusion

Overall, the applicability procedures of Rule 210.4 for major modifications are at least as stringent in all respect s as those in 40 CFR 51.166(a)(7)(iv) because (1) they do not require that a particular project cause a significant emissions increase in order to be a major modification

, (2) emission

calculations are based on the “actual

- to

- potential” test regardless of w hether the modification is for new or existing units , and (3) the treatment of fugitive emissions is consistent with the exemption provided in 40 CFR 51.166(i)(1)(ii) . Based on our analysis, we find the applicability provisions in Rule 210.4 to be acceptab le and at least as stringent, in all respects, as the requirements of 40 CFR 51.166(a)(7)(iv).

5.1.5. Revised Definitions and Terms

Pursuant to 40 CFR 51.166(b)

, PSD programs must use the definitions provided in 40 CFR 51.166(b). Deviations from the wording are to be approved only if the State demonstrate s that the submitted definition is more stringent, or at least as stringent, in all respects as the corresponding definitions in 40 CFR 51.166(b). Section II of Rule 210.4 revises some of the definitions and ter ms incorporated by reference in 40 CFR Part 52.21(b). We discuss our analysis of these provisions

below.

5.1.5.1. Actual Emissions

Section II.A of Rule 210.4 revises the definition o f “actual emissions” in 40 CFR 52.21(b)(21 )

. This definition is nearly identical to the definition found in 40 CFR 51.166(b)(21). However, it

does not contain the following exclusion that appears in 40 CFR 51.166(b)(21)(i) :

“...e xcept that this definition shall not apply for calculating whether a sig nificant emissions increase has occurred, or for establishing a PAL under paragraph (aa) of thisPage 12 of 2 5 section. Instead paragraphs (b)(41) and (b)(48) of this section shall apply for those purposes.”

This exclusion from Rule 210.4’s definition is acceptable bec ause Rule 210.4 does not use the significant emissions increase calculation and, as noted above, it does not allow the use of PALs. We find this revision to be acceptable and at least as stringent , in all respects, as the definition in 40 CFR 51.166(b)(21)

.

5.1.5.2. Administrator

Section II.B of Rule 210.4 defines the term “administrator” in Rule 210.4 as follows:

• It defines the term “a dministrator” to mean “Federal A dministrator” in 40 CFR 52.21(b)(17), (b)(37)(i), (b)(43), b(48)(ii)(c), (b)(50)(i), (b)(51), (l)(2), and (p)(2).

• It otherwise defines the term “administrator” to mean “ APCO ”, which is a defined term

in Rule 210.4

.

Because 40 CFR 52.21 was written to provide a framework for EPA to administer the PSD program in areas that do not have a SIP

- approved PSD program, the term “Administrator” as used in section 52.21 refers to the EPA Administrator. Upon EPA’s approval of Ea stern Kern ’s PSD SIP submittal, the EKAPCD will be administering the PSD program within the District, but certain

authorities are retained for the EPA Adm inistrator, per 40 CFR 51.166. Therefore, the District’s

revisions described above are intended to dif ferentiate between those provisions that will apply to

the District as the permitting authority that will administer the PSD program and those that will continue to refer to EPA (as the “Federal administrator”). We find these revisions acceptable.

5.1.5.3. APCO

S ection II.C of Rule 210.4 defines APCO as the “Air Pollution Control Officer of the Eastern Kern Air Pollution Control District”. We find the addition of this definition acceptable.

5.1.5.4. Baseline Actual Emissions

Section II.D of Rule 210.4 revises the defini tion o f “baseline actual emissions” in 40 CFR 52.21(b)(48), as incorporated by reference into Rule 210.4, to read as follows:

1. Baseline Actual Emissions means the actual rate of emissions of a pollutant from an emission unit, as determined in accordance wi th Sections II.E.2 and II.E.3 below.

2. In general, Baseline Actual Emissions as of a particular date shall equal the average rate, in tons per year, at which the unit actually emitted the pollutant during a two

- year period which precedes the particular date and which is representative of normal source operation. The Administrator shall allow the use of a different time period upon a determination that it is more representative of normal source operation. Baseline ActualPage 13 of 2 5 Emissions shall be calculated using the unit’s actual operating hours, produ ction rates, and types of materials processed, stored or combusted during the selected time period.

3. For any emissions unit which has not begun normal operations on the particular date, Baseline Actual Emissions shall equal the potential to emit of the un it.

The term “baseline actual emissions” is used in 40 CFR 51.166 to determine applicability of the PSD program. As a result, the term is associated with determining net emissions increases, projected actual emissions, reasonable possibility, and PALs. Ho wever, Rule 210.4 only uses the term “baseline actual emissions” for determining “reasonable possibility” under 40 CFR

52.21 (r)(6)

.

The definition for baseline actual emissions in 40 CFR 51.166(b)( 47 ) generally provides greater flexibility than the defin ition used in Rule 210.4. For example, in 40 CFR 51.166(b)(4 7 ), the owner/operator may choose any consecutive 24

- month period within a 10 year period (or 5 years for electric steam generating units) to determine the average emission rate for each regulated NSR pollutant. Rule 210.4’s definition calculates the average emission rate based on the specific 2

- year period which precedes a particular date. However, b oth definitions allow a different time period to be used upon a determination that it is more rep re sentative of normal operation.

The definition in 40 CFR 51.166( b )(47) also describes how to treat fugitive emissions,

non

- compliant emissions, and emission s associated with startups, shutdowns, and malfunctions ; the ability to use a different two year look back period for each pollutant; and, the need to use a two year period that the owner or operator has adequate information for determining annual emissions. While this information is not specifically included in Rule 210.4 we believe it is at least as stringent as 40 CFR 51.166 because of Rule 210.4’s requirement to use a 2

- year period that is representative of normal source operation.

Overall, both definitions require a source to determine the average emission rate, in tons per year, during a two

- year period prior to the project

, which is representative of normal operations and is

based on the rate at which a unit actually emitted a pollutant

. As a result, the definition of “baseline

actual emissions” i n Rule 210.4 is at least as stringent, in all respects , as the definition in 40 CFR 51.166(b)(48).

We note that Section II.D.1 appears to have a typographical error that references Section II.E.2 and

II.E.3 instead of the two provisions that immediately f ollow

– II.D.2 and II.D.3. We find this to be a minor oversight and recommend the District correct this error the next time the rule is open for

revision.

5.1.5.5. Major Modification

Section II.E of Rule 210.4 revises the definition o f “major modification” in 40 CFR 52.21(b)(2)

. Th e definition for “major modification” in Rule 210.4 is different from the definition in 40 CFR 51.166(b)(2) in that it is consistent with the applicability procedures found Section III of Rule

210.4 and discussed above in Section 5.1.2 of this TSD

. In other words, a ny project that causes aPage 14 of 2 5 “significant” “net emissions increase” is considered a major modification. The project itself does not have to first cause a significant emissions increase in order to trigger an evaluat ion of whether it causes a significant net emissions increase

. As noted above, w e find the applicability procedures

of Rule 210.4 to be acceptable and at least as stringent, in all respects, as the Federal applicability procedures. By the same reasoning, we find that Ru le 210.4’s definition of “major modification,”

which is consistent with the applicability procedures in Rule 210.4

, is acceptable and is at least as stringent, in all respects, as the definition in 40 CFR 51.166(b)(2).

5.1.5.6. Net Emission Increase

Section II.F of Rule 210.4 revises the definition o f “ net emission increase ” in 40 CFR 52.21(b)(3)

. The definition is revised such that the net emissions increase from a project is the sum of any increases in “actual emissions”, as that term is defined in Section II.A of Rule 210.4, from a particular project and any other increases and decreases in actual emissions at the source that are contemporaneous with the particular change and are otherwise creditable. This is consistent with the definition in 40 CFR 51.166(b)(3) , except that it does not reference the applicability procedures found in 40 CFR 51.166(a)(7)(iv) for calculating the emission changes. The result is

the use of the actual

- to

- potential test previously described and found acceptable for determining the appl icability of the PSD program to major modifications in this TSD in Section 5.1.2

.

Section II.F.6.b of Rule 210.4 uses the phrase “federally enforceable” instead of the phrase “enforceable as a practical matter” found in 40 CFR 51.166(b)(3)(vi)(b). We con sider anything that is federally enforceable to also be enforceable as a practical matter.

In addition Rule 210.4 also contains the statement: “With respect to particulate matter, only PM 10 emission s can be used to evaluate the net emissions increase for PM 10 .” T his clarification that only

PM 10 emission s can be used to evaluate the net emissions increase for PM 10 provides additional specificity to the definition that we find acceptable.

Based on our review of Rule 210.4’s definition of “net emission inc rease”, we find the definition to be at least as stringent, in all respects , as the definition of “net emission increase” in 40 CFR 51.166(b)(3).

5.1.6. Actuals PALs

The actual s PALs provisions in 40 CFR 51.166(w) and 40 CFR 51.166(aa) allow a facility to

establish a facility

- wide emissions cap for a specific pollutant

. Once the PAL is determined, a facility can make any physical modification or change in the method of operation, which might otherwise trigger a major modification, without obtaining a PSD pe rmit, as long as the actual plantwide emissions remain below the PAL level.

Rule 210.4 does not adopt the actuals PALs provisions, so sources located within the District will not have access to the flexibilities described above. However, as explained in Section 5.1.1, because of other local rules the advantages of actuals PALs, which were a part of the NSRPage 15 of 2 5 Reforms, are already likely not available to sources within the District. We find this difference acceptable.

5.1.7. References to 40 CFR 52.21(q)

Sections G of Rule 210.4 revise s the phrase “paragraph (q) of this section” in paragraph (p)(1) of

40 CFR 52.21

, as incorporated by reference into Rule 210.4

, to read as:

“within ten calendar days following a preliminary decision pursuant to Section IV, Requirements of this rule, the APCO shall publish in at least one newspaper of general circulation in the District a notice stating the preliminary decision of the APCO, not ing how pertinent information can be obtained, and inviting written public comment for a

30

- day period following the date of publication. The notice shall include the time and place of any hearing that may be held including a statement of procedure to requ est a hearing (unless a heari ng has already been scheduled). The APCO shall give notice of any public hearing at least 30 days in advance of the hearing.”

A revision to this paragraph was necessary because the District excluded paragraph (q) from its

inc orporation by reference of 40 CFR 52.21. We note that “ paragraph (q) of this section” also appears in p aragraph (l)(2) of 40 CFR 52.21 . This appears to be a minor oversight and we

recommend t he District revise Section II.G to include a reference to (l)(2) the next time Rule 210.4 is open for revision

.

I t is not clear why this provision details the notice and comment procedures in lieu of a general reference to these requirements in Section VII of Rule 210.4. However, w e consider this to also be

a minor ov ersight and recommend that the District revise the phrase “paragraph (q) of this section” to “Section VII of this Rule” the next time the rule is open for revisions.

5.1.8. Application Completeness and Public Participation

EPA’s Eastern Kern Evaluation demonstrates how Eastern Kern ’s PSD program meets the requirements of 40 CFR 51.166(q) for public participation and application processing procedures (see Attachment 3)

. The District meets these requirements through Rule 210.4 and existing

SIP

- approved Rul e 210.1

. Rule 210.4 meets the public participation requirements specified in 40

CFR 51.166 (q)(1)(i) through (vii) and Rule 210.1 meets the other application processin g procedures of paragraph (q) related to application completeness.

5.1.9. Additional Requirement s

Rule 210.4 includes additional requirements beyond those specifically included in 40 CFR 52.21 that the District finds necessary to administer the PSD program. These requirements include:

• An owner operator must obtain a PSD permit pursuant to Rule 210.4 prior to beginning

actual construction o f a new major stationary source or a major modification, as defined in 40 CFR 52.21(b);Page 16 of 2 5 • The APCO shall require compliance with Rule 210.4 prior to issuing a PSD permit;

• Applicants shall pay the applicable fees spec ified in District Regulation II; and

• Greenhouse gas emissions shall not be subject to the requirements of subsections (k) or (m) of 40 CFR 52.21.

EPA has reviewed these provisions and determined they are acceptable and consistent with the requir ements of 40 CFR 51.166.

5.1.10. Notice to EPA

40 CFR 51.166(p)(1) requires the reviewing authority to provide notice to the EPA of every action related to the consideration of a PSD permit:

Notice to EPA. The plan shall provide that the reviewing authority sha ll transmit to the Administrator a copy of each permit application relating to a major stationary source or major modification and provide notice to the Administrator of every action related to the consideration of such permit.

In a letter dat ed July 19, 2012 , Eastern Kern confirmed that:

“... Section VII of Rule 210.4 instructs the District to, “ make available in at least one location in each region in which the proposed source would be constructed a copy of all materials the applicant submitted, a copy of the preliminary determination, a copy of the proposed permit, and a copy of summary of other materials, if any, considered in making the preliminary determination ”. Section VII of Rule 210.4 goes on to explain the public notification process and directs t he District to send a copy of the public notice to the applicant and EPA. Although the intent of the section may not be clear the District interprets it to mean provide copies of all PSD docu ments to the applicant and EPA.”

Additionally, the District bel ieves Sections V.A.3 and V.A.6 of District Rule 210.1 give s greater detail to the requirement to provide EPA with a copy of each permit application related to each new major stationary source or major modification. To aid in clarity

, staff intends to updat e Rule 210.4 with similar language the next time it is open for revisions.

Based on the District ’s clarification concerning its interpretation of Rule 210.4 we find that the requirements of paragraph (p)(1) have been met.

5.1.11. Revisions to 40 CFR 52.21 After Incorporation by Reference by EKAPCD

Rule 210.4 incorporates 40 CFR 52.21 by reference as in effect on January 12, 2012

. As a result, revisions made to 40 CFR 52.21, and not in effect until after January 12, 2012 , are not a part of

Rule 210.4. On July 12, 2012, revisions related to PALs for GHG emissions language in 40 CFR 52.21 were published in the F ederal R egister and became effective on August 13, 2012. ThePage 17 of 2 5 revisions are intended to improve the usefulness of PALs for GHG emissions. However, these provisions were not included in 40 CFR 51.166, so they do not need to be included in Eastern Kern

Rule 210.4. Therefore

, although Rule 210.4 does not include these new provisions , this difference

does not affect the approvability of the rule.

We not e that Rule 210.4 clearly states at the beginning of the rule that the rule was most recently adopted and amended on January 12, 2012 . However when incorporating 40 CFR 52.21 by reference, Section IV.A states:

“Excepts as provided in Section V.B, below, t he provisions of 40 CFR 52.21, in effect (date of adoption), are incorporated herein by reference and made part of the Rules and Regulations of the

District. All references to 40 CFR 52.21 in this rule refer to the 40 CFR 52.21 in effect on (date of adopti on)”

We interpret this language to refer to the January 12, 2012 adoption date for incorporating 40 CFR 52.21 by reference. Additionally, in a letter dated July 19, 2012 , the EKAPCD confirmed that the parenthetical reference to “date of adoption ” should h ave been replaced with the actual date the rule was adopted. That is, the draft version of the rule was not properly updated upon board adoption. This error also appears in Section II of the rule. Because the rule clearly identifies the date of adoption we find this oversight acceptable and it does not affect our approvability of this

rule.

5.2. Imperial Rule 904 , Placer Rule 518, and Yolo

- Solano Rule 3.24 for Prevention of Significant Deterioration

The PSD rules submitted for ICAPCD (Rule 904)

, PCAPCD (Rule 518) , and YSAQMD (Rule 3.24) are very similar, so we have aggregated the majority of o ur analysis of these rules below

.

5.2.1. Exclusions

Section C.1 of Imperial Rule 904, Section 103 of Placer Rule 518, and Section 104 of Yolo

- Solano

Rule 3.24 exclude the fo llowing paragraphs from their incorporation by reference of 40 CFR

52.21:

Table 1 Exclusions from Provisions of 40 CFR 52.21 Incorporated by Reference

Imperial Rule 908 Placer Rule 518 Yolo

- Solano Rule 3.24

· (a)(1)

– Plan disapproval · (a)(1)

– Plan disapproval

· (a)(1)

– Plan disapproval

· (b)(55

- 58) and (cc) · (b)(55

- 58) and (cc) · (b)(55

- 58) and (cc)
· (g)

– Redesignation · (g)

– Redesignation · (g)

– Redesignation

· (p)(6

- 8)

– Class I variances by

the Governor · (p)(6

- 8)

– Class I variances by

the Governor · (i)(1)(i

- v, ix

- x) and (i)(6

- 8)

– Exemptions

· (q)

– Public participation · (q)

– Public participation

· (k)(2)

- PM 2.5 SILs

· (s)

– Environmental impact

statements · (s)

– Environmental impact

statements · (p)(6

- 8)

– Class I variances by

the GovernorPage 18 of 2 5 Imperial Rule 908 Placer Rule 518 Yolo

- Solano Rule 3.24

· (t)

– Disputed permits or redesignations · (t)

– Disputed permits or redesignations · (q)

– Public participation

· (u)

– Delegation of authority

· (u)

– Delegation of authority · (s)

– Environmental impact

statements

· (v)

– Innovative control technology · (v)

– Innovative control technology · (t)

– Disputed permits or redesignations

· (w)

– Permit rescission · (w)

– Permit rescission

· (u)

– Delegation of authority

· (f), (x), (y), and (z)

– “[Reserved]” · (f), (x), (y), and (z)

– “[Reserved]” · (v)

– Innovative control technology

· (w)

– Permit rescission

· (f), (x), (y), and (z)

– “[Reserved]”

EPA has reviewed these exclusions and, except for paragraph (q), concurs that these excluded paragraph s are not necessary to implement a state PSD program.

A SIP

- approved PSD program is required to include certain public participation requirements found in 40 CFR 51.166(q). In lieu of the public partici pation requirements found in 40 CFR 52.21(q)

, the District s specified th e applicable public participation requirements in Section F of Imperial Rule 904, Section 401 of Placer Rule 518, and Section 402 of Yolo

- Solano Rule 3.24

. Th e se public participation req uirements are further discussed in Section 5. 2. 4 of this TSD.

5.2.2. Revised Definitions and Terms

5.2.2.1. Definitions in 40 CFR 52.21(b)

Sections D.1 and D.2 of Imperial Rule 904

, and Sections 202 and 204 of Placer Rule 518, revise

the definitions incorporated by reference from 40 CFR Part 52.21(b)

, such that :

• In t he definition of “potential to emit” in 40 CFR 52.21(b)(4)

, the phrase “is federally

enforceable” instead read s “is federally enforceable or enforceable as a practical

matter”

.

• In t he definition of “allowable emissions” in 40 CFR 52.21(b)(16)

, the language reading “unless the source is subject to federally enforceable limits which restrict the operating rate, or hours of operation, or both” instead read s “unless the source is subject to enforceable l imits which restrict the operation rate, or hours of operation, or

both”

.

• Paragraph (iii) of the definition o f “allowable emissions” in 40 CFR 52.21(b)(16)

read s : “The emissions rate specified as an enforceable permit condition, including

those with a fut ure compliance date.”Page 19 of 2 5 SIP

- approved PSD programs must use the definitions provided in 40 CFR 51.166(b), except that

deviations are approvable if demonstrated to be more stringent, or at least as stringent, as the definition provided. The revisions made by the District to the definitions described above further clarify “federally enforceable”. We find these revisions to be acceptable and at least as stringent as

th e definitions in 40 CFR 51.166(b).

5.2.2.2. Administrator

Section D.3 of Imperial Rule 904, Section 201 of Placer Rule 518, and Section 201 of Yolo

- Solano

Rule 3.24 revise the term “administrator” incorporated by reference from 40 CFR 52.21

, such that :

• It defin es t he term “administrator” to mean “Federal administrator” in 40 CFR 52.21(b)(17), (b)(37)(i), (b)(43), ( b ) (48)(ii)(c), (b)(50)(i), (b)(51), (l)(2), and (p)(2).

• It otherwise defines t he term “administrator” to mean “Air Po llution Control Officer (APCO)”

.

Because 40 CFR 52.21 was written to provide a framework for EPA to administer the PSD

program in areas that do not have a SIP

- approved PSD program , the term “ A dministrator” as used

in section 52.21 refers to the EPA A dministrator. Upon EPA’s approval of the se PSD SIP

submittal s, each District will be administering the PSD program within the District, but certain

authorities are retained for the EPA Adm inistrator, per 40 CFR 51.166. Therefore, the revisions

described above are intended to differentiate bet ween those provisions that will apply to the District as the entity that will administer the PSD program and those that will continue to refer to EPA (as the “Federal administrator”). We find these revisions acceptable.

We note that Section D of Imperial Rule 904, Section 200 of Placer Rule 518, and Section 200 of

Yolo

- Solano Rule 3.24 refer only to paragraph (b) of 40 CFR 52.21 when revising terms and definitions in 40 CFR 52.21. However, the term “administrator” appears in places other than paragraph (b) and each rule goes on to speci fically identify each of those citations

. This appears to

be a minor typographical error and we recommend that the District s remove this reference to

paragra ph (b) the next time each rule is revised.

5.2.2.3. References to 40 CFR 52.21(q)

Section D.3.b of Imperial Rule 904, Sect ion 203 of Placer Rule 518, and Section 202 of

Yolo

- Solano Rule 3.24 revise references in 40 CFR 52.21 t o “paragraph (q) of this section ”, which are the public notice procedures in 40 CFR 52.21. These revis ions are necessary because each rule excludes paragraph (q) from its incorporation by reference of 40 CFR 52.21. Each rule is revised to reference the public notice procedures used by each District. We note that Section D.3.b of Imperial Rule 904 should ha ve included (p)(1) and (l)(2) when making this revision, and Section

203 of Placer Rule 518 should have included (l)(2) when making this revision. These appear to be

minor typographical error s and we recommend t he District s revise these sections the next t ime

each rule is revised.Page 20 of 2 5 5.2.3. Additional Requirements

Section E of Imperial Rule 904, Section 301 of Placer Rule 518, and Sections 301 and 401 of

Yolo

- Solano Rule 3.24 include additional requirements beyond those specifically included in 40

CFR 52.21 that the Districts find necessary to administer the PSD program. These requirements

include:

• PSD permits shall be issued pursuant to each PSD Rule prior to beginning actual construction of a new major stationary source, a major modification, or a plant wide applicability limitation (PAL) major modification, as defined in 40 CFR 52.21(b);

• The air pollution control officer shall require compliance with each PSD rule prior to issuing a PSD permit;

• Applicants shall pay the applicable fees specified in Imperia l Rule 301, Placer Rule 601, and Yolo

- Solano Rule 4.1

.

• GHG emissions are exempt from paragraphs (k) and (m) of 40 CFR 52.21.

EPA has reviewed these requirements and determined they are acceptable and consistent with the requirements of 40 CFR 40 CFR 51. 166.

5.2.4. Application Completeness and Public Participation

EPA’s Imperial, Placer and Yolo

- Solano Evaluation demonstrates how each district meets the requirements of 40 CFR 51.166(q) for public participation and application processing procedures (see Attachment 4)

. ICAPCD meets these requirements through Section F of Imperial Rule 904

and Sections A.2 and C.4 of existing SIP

- approved Imperial Rule 206. PCAPCD meets these requirements through Section 401 of Placer Rule 518 and Sections 402 and 404.1 of existi ng SIP

- approved Placer Rule 502. YSAQMD meets these requirements through Section 400 of

Yolo

- Solano Rule 3.24.

5.2.5. Notice to EPA

– 40 CFR 51.166(p)(1)

40 CFR 51.166(p)(1) requires the reviewing authority to provide notice to the EPA of every action

rel ated to the consideration of a PSD permit:

Notice to EPA. The plan shall provide that the reviewing authority shall transmit to the Administrator a copy of each permit application relating to a major stationary source or major modification and provide notice to the Administrator of every action rel ated to the consideration of such permit.

Each district confirmed this requirement is addressed to a certain extent by its incorporation by

reference of 40 CFR 52.21(p)(2) and offered further clarification confirming that the requirement

would be met :Page 21 of 2 5 • In a letter dated July 16, 2012, PCAPCD confirmed that this requirement is met to a certain extent by Section F of Placer Rule 518 and is already required by Section 407 of existing

SIP

- approved Rule 502.

• In a letter dated July 10, 2012, ICAPCD con firmed tha t Section F of Imperial Rule 904 meets this requirement to a certain extent and the ICAPCD will ensure EPA is provided copies of application s and given notice of each action related to such applications.

• In a letter dated August 7, 2012 , YSAQMD confirmed t hat this requirement is met to a certain extent by Section 400 of Rule 3.24 and the YSAQMD will ensure EPA is provided copies of applications and given notice of each action related to such applications.

5.2.6. Revisions to 40 CFR 52.21 After Incorporation by Re ference by the Districts

5.2.6.1. Imperial Rule 904

Imperial Rule 904 incorporates 40 CFR 52.21 by reference as in effect on December 20, 2011

. As a result, revisions made to 40 CFR 52.21, and not in effect until after December 20, 2011 , are not a part of Imperial Rule 904. As noted in Section 5.1.8 above, o n July 12, 2012, revisions related to

PAL s for GHG emissions language in 40 CFR 52.21 were published in the F ederal R egister and became effective on August 13, 2012. For the reasons d iscussed in Section 5.1.8

, although Imperial Rule 904 does not include these new provisions

, this difference does no t affect the approvability of the rule

.

5.2.6.2. Placer Rule 518

Placer Rule 518 incorporates 40 CFR 52.21 by reference as in effect on February 10, 2011

. As a result, revisions made to 40 CFR 52.21, and not in effect until after February 10, 2011 , are not a part of Placer Rule 518. On July 20, 2011, the definition of “subject to regulation” was revised in 40 CFR 51.166(b)(48)(ii)( a ) and 40 CFR 52.21(b)(49)(ii)( a ) to exclude the applicability of CO 2 emissions from biogenic sources from being considered “subject to regulation” until July 21, 2014.

Placer Rule 518 does not include this provision. However, because the PCAPCD ’s definition is

more str ingent than the revised definition in 40 CFR 51.166, we find this difference acceptable. In addition, as noted in Section 5. 1

. 8 above, o n July 12, 2012, revisions related to PALs for GHG emissions language in 40 CFR 52.21 were published in the F ederal R eg ister and became effective on August 13, 2012. For the reasons discussed in Section 5.1.8 , although Placer Rule 518 does not include these new provisions

, this difference does not affect the approvability of the rule.

5.2.6.3. Yolo

- Solano Rule 3.24

Yolo

- Solano Ru le 3.24 incorporates 40 CFR 52.21 by reference as in effect on June 13, 2012

. As a result, revisions made to 40 CFR 52.21, and not in effect until after June 13, 2012 , are not a part of

Yolo

- Solano Rule 3.24. As noted in Section 5. 1.8 above, on July 12, 2012, revisions related to PALs for GHG emissions language in 40 CFR 52.21 were published in the Federal Register and became effective on August 13, 2012. For the reasons discussed in Section 5.1.8

, although

Yolo

- Solano Rule 3.24 does not include these new provisions , this difference does not affect the approvability of the rule.Page 22 of 2 5 We note that Rule 3.24 clearly states that the rule was adopted on June 13, 2012 (at the beginning of the rule and on each page of the rule). However when inc orporating 40 CFR 52.21 by reference,

Section 103 states:

“Except as provided in Section 104, the provisions of 40 CFR 52.21, in effect on (date of adoption or July 1, 2012 if adopted after that date), are incorporated herein by reference and made part of the Rules and Regulations of the Yolo

- Solano Air Quality Management District.”

We believe that the rule is clearly referring to the June 13, 2012 adoption date for incorporating 40 CFR 52.21 by reference. (The reference to Section 104 of the Rule is a re ference to revisions made

the YSAQMD to the incorporated provisions of 40 CFR 52.21 , discussed elsewhere in this TSD .)

I n a letter dated August 7, 2012 , the YSAQMD confirmed that the parenthetical reference to “date of adoption or July 1, 2012 if adopted after that date” should have been replaced with the actual date the rule was adopted. This error also appears in Section 200 of the rule. That is, the

pre

- adoption version of the rule was not properly updated upon board adoption. Because the rule clearly i dentifies the date of adoption we find this oversight acceptable and it does not affect our approvability of this rule.

5.3. PM 2.5 Significant Impact Levels

Eastern Kern Rule 210.4, Imperial Rule 904, and Placer Rule 518 each incorporated by reference

the PM 2.5 s ignificant impact l evels (SILs) found in 40 CFR 52.21(k)(2). ( Yolo

- Solano Rule 3.24 does not incorporate these PM 2.5 SILs, by reference or otherwise. ) Consistent with 40 CFR 51.166(k)(2), the PM 2.5 SILs are an optional portion of the PSD permitting pr ogram. However, EPA's authority to implement the PM 2.5 SILs for PSD purposes is currently subject to litigation,

Sierra Club v. EPA, Case No. 10

- 1413 (D.C. Circuit). As a result, EPA has come to recognize that the regulatory text it adopted in 40 CFR 51.16 6 (k)(2) and 40 CFR 52.21(k)(2) does not accurately reflect EPA's intent, because the text does not afford permitting authorities sufficient discretion to deny sources use of the SILs where their use would lead to a new violation of the NAAQS or

increment. EPA requested in our response brief to the Court in this litigation that the Court remand and vacate 40 CFR 51.166(k)(2) and 40 CFR 52.21(k)(2) so that we may initiate a rulemaking to make revisions to the regulatory text.

Specifically, 40 CFR 52.21(k)( 2) establishes SILs for PM 2.5 and reads as follows:

(k)(2) Significant impact levels

. For purposes of PM 2.5 , the demonstration required in paragraph (k)(1) of this section is deemed to have been made if the emissions increase from the new stationary source alone or from the modification alone would cause, in all areas, air quality impacts less than the following amounts:

Pollutant Averaging time Class I area Class II area Class III area

PM 2.5

................. Annual ............ 0.06 μg/m 3 0.3 μg/m 3 0.3 μg/m 3

24

- hour ........... 0.07 μg/m 3 1.2 μg/m 3 1.2 μg/m 3Page 23 of 2 5 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 emissio ns 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, “ n otwithstanding 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 new source or modification.” Prevention of Significant Deterioration (PSD) for Particulate Matter Less than 2.5 Micrometers (PM 2.5 )

– Increments, Significant Impact levels (SILs) and Significant Monitoring Concentration (SMC), 75 Fed. Reg. 64,864, 64,892 (Oct. 20, 2010). In another passage of the p reamble, EPA also observed that “ t he use of a SIL may not be appropriate when a substantial portion of any NAAQS or increment is known to be consumed.”

Id. at 64

, 894.

In light of the ongoing litigation over the PM 2.5 SILs and EPA's request for remand a nd vacatur of the provision at 40 CFR 52.21(k)(2), we requested clarification from EKAPCD, ICAPCD, and PCAQMD concerning their interpretation of their respective rules that incorporate by reference 40 CFR 52.21(k)(2). Consistent with the statements by EPA in the preamble to the 2010 final rule,

the se District s confirmed that they do not interpret section 52.21(k)(2) to preclude the m from exercising the discretion to determine when it may be appropriate to conclude that even a de

minimis impact on air quality (an impact below the PM 2.5 SIL values) will cause or contribute to an air quality problem and to seek remedial action from the proposed new source or modification (see

Attachment 5 ). Based on this interpretation, each of these Distri ct s has clarified that it will not read section 52.21(k)(2) as an absolute “safe harbor,” but will exercise discretion to determine whether a particular application of the PM 2.5 SILs is appropriate when a substantial portion of the PM 2.5 NAAQS or increment is known to be consumed. The se Districts have also clarified that they retain the discretion to require additional information from a permit applicant as needed to assure that the source will not cause or contribute to a violation of any NAAQS or applicab le increment pursuant to paragraph 52.21(k)(1). Based on the se clarifications provided by EKAPCD

, PC APCD, and

IC APCD, we find the ir rules are approvable and consistent with the Act and the requirements for a PSD program.

6. Program Transfer and Implementatio n Issues

As discussed in Section 2 , EPA requested

, among other things, that each District provide further confirmation and explanation concerning (1) the District’s authority, personnel, and funding to implement the PSD program within the District pursuant to CAA Section 110(a)(2)(E)(i), and (2)

where applicable, the District’s request to implement the PSD program with respect to existing PSD permits issued by EPA. The District s subsequently provided the requested information (see

Attachment 2 ).

In a July 6, 2012 letter , t he PCAPCD confirmed that, as part of, and concurrent wi th, EPA’s approval of the District’s PSD program into the SIP, the District is requesting approval to exercise its authority to administer the P SD program with respect to the single source l ocated in the District

that has an exist ing PSD permit issued by E PA. This would include authority to conduct generalPage 24 of 2 5 administration of this existing permit , authority to process and issue any and all subsequent PSD permit actions relating to this permit including, for example, modifications, amendments, or

revisions of any nature, and authorit y to enforce such permits.

In a July 19, 2012 letter , the EKAPCD confirmed that, 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 P SD program with respect to the 6 sources l ocated in the District that

have an exist ing PSD permit issued by EPA. This would include authority to conduct general administration of these existing permits, authority to process and issue any and all subsequent PSD permit actions relating to such permits including, for example, modifications, amendments, or revisions of any nature, and authorit y to enforce such permits.

There are no existing EPA

- issued PSD permits in the ICAPCD or t he YSAQMD.

Pursuant to s ection 110(a)(2)(E)(i) of the Act, each District’ s SIP submitt al and clarification letter s demonstrate that each District ha s the authority under State statute and/or rule to administer the PSD permit program, including but not lim ited to the authority to administer, process and issue any and all permit decisions, and enforce PSD permit requirements within each District . This applies to PSD permits the District will issue and to existing PSD permits issued by EPA that are to

be tran sferred upon the effective date of EPA’s approval of the Districts’ PSD SIP submittals.

The District s’ SIP submittals and clarification l etter s also demonstrate that the District has adequate personnel and funding to administer, implement and enforce the PSD program.

The existing PSD permits issued by EPA fo r which EPA currently anticipates that responsibility

would be transferred to the Distric t immediately upon the effective date of an EPA final action approving the PSD SIP submittal s are identified in Attachment 6 t o this TSD

. EPA intends to provide a copy of these permits to the District prior to the effective date of the final SIP approval

. Upon approval of the Districts’ PSD SIP submittals, EPA will assume an oversight role of the

Districts ’ PSD permitting program s , as intended by the Act.

6.1. PSD Permit Applications Currently Under Review by EPA

In order to promote an orderly transition of t he PSD program from the EPA to the District s , EPA

believe s it is appropriate to transfer upon the effective date of our final SIP approval action for

each District any pending PSD permit applications for sources within such District that are under

review by EPA prior to such approval. This would include PSD permit applications that have been submitted to EPA, but for which EPA has not yet issued a proposed decision. EPA has been working with applicants and the Districts to ensure that the transition proces s does not result in

undue project delays and to ensure that such applications are acted upon in a timely manner.

7. Section s 110(a), 110( l )

, and 193 of the Act

CAA s ection 110(a) requires, among other things, that the requirements of SIP rules be

enforceable. Sources subject to Eastern Kern Rule 210.4, Imperial Rule 904, Placer Rule 518, andPage 25 of 2 5 Yolo

- Solano Rule 3.24 are required to meet emission limits and other measures for the prevention of significant deterioration of air quality, which meets the enforceability requirement in section 110(a).

We have also evaluated th ese SIP revision s to determine whether they would interfere with any applicable requirement concerning attainment and reasonable further progress ( RFP ) or any other applicable require ment of the Act (CAA section 110(l)) or whether they would modify, in a nonattainment area, any SIP

- approved control requirement in effect before November 15, 1990 (CAA section 193).

We find that our approval of the submittal s would comply with CAA sectio n 110(l), because the SIP, as revised to reflect the submitted revision s , would provide for RFP and attainment of the NAAQS , and the requirements of the PSD SIP revision s are essentially equivalent to, and at least as stringent as

, th ose of the FIP codified in 40 CFR 52.21 and used to date by EPA to implement the required PSD program within the se District s

. As described elsewhere in this document, approval of th ese SIP submittal s would merely result in the transfer of authority for the PSD program fr om the EPA to the District s
, and therefore would not result in any substantive changes

to the PSD program requirements

, other CAA requirements, or air quality.

Further, s ection 193 of the CAA does not apply to this proposed action because th ese submittal s to incorporate PSD requirements into the SIP do not address nonattainment pollutants.

8. Recommendations

Pursuant to section 110(k)(3) of the Act, we recommend full approval of Eastern Kern Rule 210.4, Imperial Rule 904, Placer Rule 518, and Yolo

- Solano R ule 3.24

. We recommend approval based

on our determination that the submittal s comply with the applicable statutory and regulatory provisions requiring regulation of major stationary sources

, in particular, part C of title I of the

Act. If finalize d , our a ction would be codified thro ugh revisions to 40 CFR 52.220

– Identification of plan and 40 CFR 52.270

– Significant deterioration of air quality

.

9. Attachments

• Attachment 1

– Eastern Kern Rule 210.4, Imperial Rule 904, Placer Rule 518 and

Yolo

- Solano Rule 3.24

• Attachment 2

– Letter s received from EKAPCD, ICAPCD, PCAPCD and YSAQMD regarding certain clarifications of each district’s PSD permit program

• Attachment 3

– Evaluation of 40 CFR 51.166 and Eastern Kern Rule 210.4 , EPA Region 9,

Attachment 4

– E valuati on of 40 CFR 51.166 and Imperial Rule 904, Placer Rule 518, and

Yolo

- Solano Rule 3.24

, EPA Region 9

,

• Attachment 5

– Letters received from EKAPCD, ICAPCD, and PCAPCD regarding the

PM 2.5 SILs

• Attachment 6

– List of EPA

- issued PSD Permits for EKAPCD, ICAPCD, PCAPCD, and YSAQMD

, EPA Region 9