November 12, 2015

Gerardo Rios (Air-3)

U.S. Environmental Protection Agency, Region 9

75 Hawthorne Street

San Francisco, CA 94105-3901

RE: Docket ID Number EPA-R09-OAR-2015-0280: SIP Limited Disapproval: 

BAAQMD Stationary Source Permits

Dear Mr. Rios,

We write to provide comments on behalf of the California Council for Environmental and 

Economic Balance (CCEEB) on the limited disapproval of the Bay Area Air Quality 

Management District (BAAQMD or “District”) New Source Review (NSR) rules, 

Regulation 2, Rules 1 and 2. CCEEB members operate facilities with numerous major 

and minor source permits in the Bay Area and are directly affected by the District’s NSR 

rules.

We have three major areas of concern with EPA’s proposal:

1. NAAQS%Protection%Requirement,%De%Minimis%Threshold:$the$District’s$new$

requirement$for$significant$minor$sources$(Reg.$2,$section$2;2;308)$goes$above$

and$beyond$what$is$required$for$federal$NSR$purposes$in$that$it$applies$

Prevention$of$Significant$Deterioration$(PSD)$modeling$to$minor,$non;attainment$

pollutants.$Accordingly,$CCEEB$believes$that$the$District$has$authority$to$set$a$de$

minimis$level$for$minor$sources$it$deems$as$less$than$significant.$EPA’s$

disapproval$appears$inconsistent$with$federal$guidelines$and$imposes$

administrative$burden$without$achieving$meaningful$environmental$benefits.

2. Emissions%Calculations%for%Major%Sources%of%Non?Attainment%Pollutants:%EPA’s$

proposed$emissions calculation$for$the$generation$of$emission$reduction$credits$

and$for$determining$offset$requirements$strays$from$the$District’s$existing$and$

previously$approved$approach$in$that$it$uses$an$actual$emissions$baseline$instead$

of$potential$to$emit$(PTE).$CCEEB$is$troubled$as$EPA’s$proposal$would$invalidate

ERCs$that$reflect$real;world$emissions$reductions,$and$then$double;count how$

many$offsets$are$required$for modified$sources$that$have$already$fully$offset$

emissions$up$to$their$PTE.$
Mr.$Gerardo$Rios

November$12,$2015

Page$2

3. Class%1%Area%Visibility%Impact%Analysis,%100?km%“Bright%Line” Threshold: the$

District’s$Reg.$2,$section$2;2;401.4$relies on$EPA$guidance$to$establish$when$

visibility$impact$analysis$is$required,$and$yet$EPA$disapproved$of$this$“bright$line”$

threshold.$EPA$should$either$clarify$how$to$implement$the$“may$have$an$impact”$

language$in$40$C.F.R.$51.307$or$reverse$its$disapproval. CCEEB$believes$it$is$in$the$

best$interests$of$all$stakeholders$to$have$a$clear,$transparent$basis$for$District$

decisions$on$what$sources$need$to$conduct$impacts$analysis.

CCEEB asks EPA staff to work with the BAAQMD to resolve differences in 

interpretation of Clean Air Act (CAA) requirements pertinent to EPA’s proposal, and that 

EPA approve Regulation 2, Rules 1 and 2 as expeditiously as possible. We provide 

further detail and discussion on each of our concerns in the rest of this letter.

Allow the BAAQMD to Set a De Minimis Level for Minor Source Permits, Avoid 

Possible Unintended Consequences in Non-Attainment Areas

EPA disapproved of Reg. 2, section 2-2-308, seemingly because the District does not 

require impact analysis for any project (i.e., both minor and major modifications) that 

emits a non-attainment pollutant. 

Consistent with federal NSR requirements, section 2-2-305 requires an impact analysis 

for a significant increase in a PSD pollutant from a major facility; modeling is done to 

ensure that emissions will not cause or contribute to any NAAQS exceedance. The 

“NAAQS Protection Requirement” in section 2-2-308 would extend applicability of 

PSD-modeling requirements to any source that results in a significant net increase in 

any pollutant. Thus, section 2-2-308 expands the use of PSD-modeling by both the 

type of facility (i.e., both minor and major facilities) and the number of pollutants (i.e., 

both PSD and non-attainment pollutants). However, section 2-2-308 allows use of 

EPA’s NSR significance levels to determine whether a project’s emissions could be 

considered de minimis, and thus not required to conduct an impact analysis.1

EPA found that section 2-2-308 does not satisfy CAA requirements under 40 CFR 

51.160(a) because it only applies to projects that will results in a “significant net 

increase” rather than any project (“i.e., both minor and major modifications”). First, 

CCEEB disagrees that the CAA requires a NAAQS-compliance demonstration for nonattainment pollutants. Moreover, it is hard to see how such a provision could be 

implemented in non-attainment areas without creating a de facto permit moratorium, as 

it would be very challenging if not impossible for sources to prove compliance using 

PSD-modeling methods.2 In terms of 40 CFR 51.160(a), the District agrees that impact 

 1 Section 2-2-227.1 establishes de minimis levels for PSD pollutants. Sources with de minimis emission levels are not required to 

conduct impact analysis for PSD pollutants under section 2-2-305; EPA has not challenged this section, yet disapproves use of the 

same de minimis thresholds in section 2-2-308. 2 The BAAQMD minimizes this concern in the San Francisco Bay Area air basin because the region is currently in compliance for all 

NAAQS, even though it is officially deemed as a non-attainment area for ozone and PM2.5. Staff argues that the air basin has 

sufficient “headroom” to give projects flexibility in terms of demonstrating compliance for ozone and PM2.5.
Mr.$Gerardo$Rios

November$12,$2015

Page$3

analysis for non-attainment pollutants is not required by federal regulations. For 

example, in staff’s response to public comments, the District states explicitly that 

section 2-2-308 “is not based on an interpretation that it is required by EPA’s federal 

NSR program requirements.... Staff are [sic] proposing this requirement because it is 

important from an air quality and public health perspective...not because District staff 

believe that it is legally required.”3

Second, while CCEEB disagrees with the District’s decision to submit section 2-2-308 

to EPA as part of the State Implementation Plan (SIP) since this provision is not required 

under federal NSR rules, we do agree that the BAAQMD has authority to apply de 

minimis thresholds, and we support its use of NSR significance levels for this purpose. 

For most minor sources—and the businesses operating them—conducting impact 

analysis would be administratively burdensome and costly, as would BAAQMD staff 

resources needed for review. Under State law—not federal law—the District already 

requires minor sources that emit more than 10 pounds per day of key air pollutants to 

install Best Available Control Technology (BACT); and sources that emit 10 tons per 

year or more of ozone precursors must provide emissions offsets.4 These requirements 

apply to about 8000 minor sources in the Bay Area. Adding an air impact analysis 

requirement gains almost nothing additional in terms of air quality since, in total, minor 

sources account for only 0.02% to 0.34% of the air basin’s total inventory. For these 

reasons, it is difficult to understand the basis of EPA’s concern over using its NSR 

significance levels to set a de minimis threshold in section 2-2-308.

It is worth noting that EPA has found that District measures, rules, and regulations are 

adequate in terms of meeting NAAQS for all pollutants. Furthermore, the District’s NSR 

permit program requires all sources to be in compliance with its rules and regulations. 

As the staff report explains, “District Staff have [sic] conducted a detailed analysis of 

this situation, for both attainment and non-attainment pollutants. Based on this 

analysis, it is clear that the District’s NSR program satisfies 40 C.F.R. Section 51.160 

because it requires all new and modified sources to comply with the District’s 

comprehensive regulatory program, which will provide for attainment and maintenance 

of the NAAQS even with a certain amount of growth from new and modified sources.”5

BAAQMD PTE-to-PTE Test vs. EPA Actual-to-Potential Test for Calculating ERCs 

and Cumulative Increases

EPA disapproved of the way the District calculates generation of Emission Reduction 

Credits (ERCs)(section 2-2-605.2) and cumulative increases for modified sources 

(section 2-2-606.2) because Reg. 2-2 uses the difference between the pre-modification 

potential-to-emit (PTE) and the post-modification PTE (or potential-to-potential) to 

calculate emissions rather than an actual-to-PTE calculation preferred by EPA.

 3 BAAQMD Responses to Comments on Final Version of Proposed Amendments, October 31, 2012. Page 9. 4 Federal NSR rules only require BACT and offsets for major facilities, i.e., those that emit 100 tons per year in most instances. So 

BAAQMD rules are much more stringent for minor sources than federal law requires.

5 Updates to BAAQMD New Source Review and Title V Permitting Programs: Regulation 2; Rules 1,2,4, and 6: Final Staff Report, 

September 26, 2012. Pages 84-85. 
Mr.$Gerardo$Rios

November$12,$2015

Page$4

EPA’s proposed actual-to-PTE calculation is a departure from its own federal program, 

which uses an actual-to-allowable emissions calculation for offsets. EPA also uses an 

actual-to-projected-actual calculation to determine whether major NSR requirements 

are triggered, which reflects changes made in 2002 that are collectively referred to as 

“NSR reform.” It should be noted that EPA’s actual-to-projected-actual calculation is 

commonly viewed as less stringent than the potential-to-potential test proposed in Reg. 

2-2. Because it is less stringent, and because the BAAQMD has long used the 

potential-to-potential calculation in its NSR rules, the District argues that it cannot 

adopt the NSR reform test, as this would violate the State’s “anti-backsliding” law, SB 

288. The District further argues its use of post-modification PTE is consistent with 

federal definitions of “allowable emissions” and as such, meets federal NSR 

requirements.

EPA’s recommended actual-to-PTE test, on the other hand, goes beyond both the 

potential-to-potential calculation put forth by the District and the actual-to-projected 

actual calculation used for NSR reform. CCEEB is concerned because the actual-toPTE calculation requires that sources surrender offsets multiple times for the same 

emissions, which themselves have already been fully offset through the NSR permitting 

process. Sources also lose the value of ERCs previously surrendered as offsets. At 

issue seems to be the common practice among air districts to allow sources to account 

for previously provided offsets in permit changes. We are unsure why EPA is raising 

concerns over this now, and we urge EPA staff to work with District counsel to develop 

a common interpretation of Clean Air Act requirements.

The practical effect of EPA’s proposed actual-to-PTE calculation could be to stymie 

facility modernization projects at a time when the District and state agencies are urging 

sources to upgrade equipment and become more efficient as a means to achieving air 

quality and climate goals. EPA’s proposal seems counter productive. It is helpful to 

note that the Bay Area is currently in attainment of all NAAQS, including the 8-hour 

ozone standard and 24-hour PM2.5 standard, and does not need to achieve further 

annual incremental reductions in emissions for attainment purposes (i.e., to show 

reasonable further progress). We ask EPA to clarify the rationale for its disapproval and 

to provide a full evaluation of approaches to calculate offsets and ERCs at different air 

districts so as to better substantiate its actual-to-PTE recommendation for the 

BAAQMD.

BAAQMD Rightfully Sets a “Bright Line” for Class I Area Visibility Impact Analysis

EPA’s own guidance recommends using a 100-km proximity test to determine whether 

or not to require a new or modified source to conduct a visibility impact analysis for 

Class I areas. CCEEB believes that it is beneficial to all stakeholders to have clear, 

transparent, and consistent permit requirements. Ambiguity over rules and regulations 

only leads to confusing and conflicting interpretations, which in turn increases the 

likelihood of unnecessary litigation. Indeed, one of the District’s key objectives in 

amending Reg. 2 was to reduce ambiguity and provide clarity. If the District’s “bright 

line” approach is inadequate, then we ask EPA to provide further guidance to clarify 

when and why the 100-km test is insufficient.
Mr.$Gerardo$Rios

November$12,$2015

Page$5

Thank you for considering our views.

William J. Quinn

Chief Operating Officer

cc: Amy Zimpfer, Associate Director, Air Division, EPA, Region 9

Alexander Crockett, BAAQMD

Gerald D. Secundy, CCEEB

Members of the CCEEB Bay Area Partnership