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PROPOSED ADOPTION OF

RULE 3.24, PREVENTION OF SIGNIFICANT

DETERIORATION

FINAL STAFF REPORT

May 29, 2012

Prepared by: Paul Hensleigh, Deputy Air Pollution Control Officer
II. DISCUSSION OF PROPOSED RULE 3.24 REQUIREMENTS 3

III. COMPARISON TO OTHER APPLICABLE REGULATIONS AND REQUIREMENTS 4

IV. IMPACTS OF THE PROPOSED RULE 4

V. ENVIRONMENTAL IMPACTS OF METHODS OF COMPLIANCE 6

VI. REGULATORY FINDINGS 6

VII. PUBLIC COMMENTS AND STAFF RESPONSES 7VIII. REFERENCES 7

ATTACHMENT A PROPOSED RULE 3.24, PREVENTiON OF SIGNIFICANT

DETERIORATION; STRIKE-OUT UNDERLINE VERSION

ATTACHMENT B NOTICE OF EXEMPTION .FROM CEQA GUIDELINES

ATTACHMENT C RESOLUTION NO. 12-06

ATTACHMENT D WRITTEN COMMENTS RECEIVED

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which was developed by the California Air Pollution Control Officers Association

(CAPCOA) and approved by the Environmental Protection Agency (EPA), Region 9.

Adoption of this Rule will not add any new applicable requirements to any source in our

jurisdiction; it merely makes the District the permitting authority of the program, instead

of EPA Region 9. There are currently no sources in our jurisdiction with a P50 permit;

however a PSD application was filed with EPA in 2008 by CPV Vacaville, LLC.

For any potentially affected sources, if our District is the permitting authority, the

permitting process should be simpler — the company would only need to work with one

agency (the District) for air permitting instead of two (the District and EPA).

The District does not expect the proposed rule to have either a significant nor adetrimental effect on the environment. Therefore, staff has prepared a Notice of

Exemption (NOE) to satisfy the California Environmental Quality Act (CEQA)

requirements. The NOE states that the adoption of this proposed rule is exempt from

the requirements of CEQA pursuant to Section 15308, Actions by Regulatory Agenciesfor Protection of the Environment.

A. BACKGROUND

The Federal Clean Air Act (CM), sections 110(a)(2)(C) and 161 actually require each

state (and therefore district) to adopt a PSD program. However, historically EPA has notenforced this requirement, which they could do by issuing a Federal Implementation

Plan (FIP). Recently EPA region 9 has made a strong push to have all California

districts implement the PSD program. Accepting delegation for this program (and

adoption of this rule) is a critical component in our District’s work plan for the pilot EPA

section 105 grant which the District received in 2011.

PSD is a federal pre-construction permitting program for new major stationary sources

and significant modifications to existing major sources located in areas classified as

“attainment for any criteria air pollutant. PSD is part of federal New Source Review

(NSR) from Title 1 of the CM. The other components of federal NSR are nonattainment NSR and minor source NSR, which we already administer through our Rule

3.4.

The other federal permitting programs which our District has experience with are theTitle V Federal Operating Permit Program (which is for major sources of pollutants

regardless of attainment status) and the Acid Rain Program (which applies to fossil fuel

fired power plants). For these other 2 federal permitting programs, the District is the

permitting authority, as delegated by EPA. By adopting this rule and getting the rule

approved into the State Implementation Plan (SIP), our District would also become the

permitting authority of the PSD program for our jurisdiction.

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handled locally (by the District’s Hearing Board) instead of the federal Environmental

Appeals Board (EAB) in Washington DC, as is the case if EPA is the permitting

authority.

- If EPA is the permitting authority, the federal Fish and Wildlife Service and the

National Marine Fisheries Service must be consulted regarding the Endangered

Species Act (ESA) requirements because issuance of the PSD permit is considered

a federal action. If the District is the permitting authority, this consultation is not

required, although the source is still required to comply with any applicable ESArequirements.

II. DISCUSSION OF PROPOSED RULE 3.24 REQUIREMENTS

Who is Subject to PSD Permitting?A pre-construction PSD permit would be required for any new major source (or major

modification of an existing major source) of any pollutant designated as attainment orunclassifiable in the District, as well as other pollutants subject to regulation underthe

Federal Clean Air Act. For our District, these pollutants include, but are not limited to:

- Carbon Monoxide (CC),

- Nitrogen Dioxide (N02),

- Sulfur Dioxide (S02),- Particulate Matter less than 10 microns (PMIO),

- Particulate Matter less than 2.5 microns (PM2.5),-‘ Lead, or- Greenhouse Gases (GHG).

However, of these only CO or GHG are likely to actually trigger a source into the PSD

program in our district.

New Major Sources

A major source is a facility that emits 250 tons per year of an applicable pollutant, except

for GHGs which the facility must emit 100,000 tons per year in terms of Carbon Dioxide

equivalent units (C02e). For these sources, fugitive emissions do not count towards the

threshold. There are 28 types of industries where a major source is defined as 100 tons

per year of an applicable pollutant, with the same exception for GHGs. For sources in

these categories, fugitive emissions are included.

Major modifications at existing maior sources

A major modification of an existing major source is defined as a modification that results

in a significant emissions increase. An increase of more than 100 tons per year (TPY) of

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What are the requirements of PSD?

The three main requirements of each PSD permit are Best Available Control Technology

(BACT), an ‘air quality impact analysis’, and public notice.

BACT

BACT must be employed on each emissions unit that emits an applicable air pollutant in

excess of the significant modification threshold for that pollutant. If the District received a

PSD application, staff would perform a case-by-case analysis to determine the maximum

degree of reduction available for the proposed source or modification. It should be noted

that BACT is already required by the District’s NSR rule.

Air Quality lmiact Analysis

The ‘air quality impact analysis’ is modeling which must demonstrate that the emissions

increase from the source will not cause or contribute to an exceedance of a National

Ambient Air Quality Standard (NAAQS) or impact Class I areas such as National Parks.

This analysis compares the background concentration of a pollutant plus the potential to

emit of the new emissions units to the NAAQS on an hour by hour basis over the courseof a year. In order to determine the background concentration of a pollutant, either a

public monitoring site nearby which has collected three to five years of ambient data, or

one year of site-specific monitoring is required where the pollutant concentration andweather data is collected on an hourly basis.

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

emission controls or operational limitations must be imposed to prevent the exceedance.

If there is still concern that the NAAQS may be exceeded, then post-project air quality

monitoring may be imposed on the applicant.

The federal regulations impose a maximum amount of concentration that a single source

can increase the ambient air concentration regardless of whether the NAAQS is

exceeded or not. This is called an ambient air increment and is different for each

pollutant and is measured in micrograms per cubic meter.

There are no NAAQS or ambient air increment established for GHGs, therefore the airquality impact analysis is not required for GHGs. Rule 3.24 exempts the applicant from

some of the air quality analyses for GHGs.

Public Notice

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- (a)(1) Plan Disapproval, (g) Redesignation in 1974, (p)(6)-(8) Class I S02 Variances

by the Governor, (t) Disputed permits or redesignations, and (u) Delegation of

authority, as these sections do not have a role in the District’s implementation of a

PSD permitting program.

- (b)(55)-(58) process unit definitions struck down by DC Circuit Court but not yet

removed from the CFR, and (cc) Routine Maintenance, Repair and Replacementprovisions struck down by DC Circuit Court but not yet removed from the CFR.

- (f), (x), (y), and (z), as these sections are reserved for future use and contain no

requirements.

- (i)(1)(i)-(v) and (ix)-(x), and (i)(6)-(8), as these are exemptions that no longer apply,- (k)(2), because of ongoing litigation

- (s) Environmental impact statements, as this requirement applies to permits issued

by federal agencies only. In California, CEQA requirements govern District permitting

actions in a similar way.

- (w) Permit rescission, as all permitting processes, including rescinding permits that

are on longer active or necessary, would be handled under the District Regulation Ill.

There are no NAAQS or ambient air increments established for GHGs, therefore the air

quality impact analysis is not required for GHGs, and will be exempted from sections (k)

and (m).

Ill. COMPARISON TO OTHER APPLICABLE REGULATIONS AND REQUIREMENTS

CH&SC Section 40727.2 requires districts to perform a comparative alternative analysis

of any new control standard. Specifically, the District is required to prepare a written

analysis (usually in the form of a matrix) that identifies all existing federal air pollution

control requirements, inclUding, but not limited to emission control standards constitutingbest available control technology (BACT) that applies to the same equipment or source

type as the rule or regulation proposed for adoption or modification by the District. In

addition, the analysis shall identify any other District rule, regulation, or guideline thatapplies to the same equipment or source type. -

Pursuant to CH&SC Section 40727.2 (g) a rule consistency analysis of the draft nile is

not required. The draft rule does not strengthen emission limits or impose more stringentmonitoring, reporting, or recordkeeping requirements.

IV. IMPACTSOF THE PROPOSED RULE

Emissions Impacts

Adoption of this rule is not expected to have an impact on emissions — whether the

District adopts this rule or not, sources with emissions above the thresholds would still

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regulation, to consider and make public its findings related to the cost effectiveness of a

control measure. Cost effectiveness for rulemaking purposes is calculated by dividing

the cost of air pollution controls required by the rule by the amount of air pollution

reduced.

For any potential PSD sources, the costs associated with this rule will be fee for the

District to process the PSD permit. In accordance with District rule 4,1, the fee for a Title

V permit is based on the actual hours spent processing the permit (using the District’s

standard time and material rate). Any PSD permit application we receive would be

processed in conjunction with a Title V permit application. Therefore, the fee for the

PSDITitIe V permit would be based on the actual time it took to process.

Since there are no reductions expected from the adoption of this rule, no costeffectiveness calculations can be performed.

Socioeconomic Impacts

CH&SC Section 40728.5 (a) requires the District, in the process of the adoption of anyrule or regulation, to consider the socioeconomic impact if air quality or emission limits

may be significantly affected. However, districts with a population of less than 500,000persons are exempt from the provisions of Section 40728.5 (a). The District’s population

is estimated to be approximately 332,000 and well below the 500,000 person threshold.

Therefore, a socioeconomic analysis for this rulemaking is not required.

Incremental Cost Effectiveness

CH&SC Section 40920.6 requires an assessment of the incremental cost-effectiveness

for proposed regulations relative to ozone, Carbon Monoxide (CO), Sulfur Oxides (SOx),

Nitrogen Oxides (NOx), and their precursors. Incremental cost-effectiveness is defined

as the difference in control costs divided by the difference in emission reductions

between two potential control options that can achieve the same emission reduction goal

of a regulation. There is no incremental cost effectiveness for this rule, since there are

no expected reductions,

Impacts to the DistrictIt is anticipated that the proposed rule will have little to no impact on staff workload at the

District. It is expected that any additional work load such as development of application

forms and permit evaluation and issuance can be absorbed within the stationary source

division at the District. As stated above, any actual applications received would be

charged fees based on the actual time spent processing the application by District staff.

V. ENVIRONMENTAL IMPACTS OF METHODS OF COMPLIANCE

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The adoption of Rule 3.24 will not have a significant effect or, the environment or

humans due to unusual circumstances. In addition, proposed Rule 3.24 is an action

taken to protect the environment. Therefore, staff have determined that the project is

categorically exempt from the requirements of the CEQA pursuant to Section 15308,

Actions by Regulatory Agencies for Protection of the Environment. Staff prepared a

Notice of Exemption (NOE) to meet the CEQA Guidelines (Attachment B).

VI. REGULATORY FINDINGS

Section 40727(a) of the CH&SC requires that prior to adopting or amending a rule orregulation, an air district’s board make findings of necessity, authority, clarity,

consistency, nonduplication, and reference. The findings must be based on the

following:

1. Information presented in the District’s written analysis, prepared pursuant to

CH&SC Section 40727.2;

2. Information contained in the rulemaking records pursuant to CH&SC Section

40728; and

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

The required findings are:

Necessity: This rule adoption is required by Section 1 10(a)(2)(C) and 161 of the federalClean Air Act.

Authority: The District is authorized to adopt rules and regulations by CH&SC, Sections

40001, 40702, 40716, 41010 and 41013.

Clarity: District staff believes that this rule can be understood by the affected industry. In

addition, the record contains no evidence that the persons directly affected by the rule

cannot understand the rule.

Consistency: The proposed rule does not conflict with and is not contradictory to,

existing statutes, court decisions, or state or federal regulations.

Non-Duplication: The proposed rule does not duplicate any state laws or regulations.

Reference: Any statutes, court decisions, or other provisions of law that the Districtimplements, interprets, or makes specMc by adopting the rule are incorporated into this

analysis and this finding by reference.

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surrounding Air Districts, City Managers within the District, building/planning/communitydevelopment departments within the District, all city and county libraries within the

District, all Board members, and permitted sources. The notice was also published in

the West Sacramento Press, Dixon Tribune, Vacaville Reporter, Woodland Daily

Democrat, Rio Vista River News Herald, Winters Express, and the Davis Enterprise.

A copy of the public notice, draft staff report, and draft rule language, was posted on the

District’s web page.

The District received no comments on this rule.A copy of the updated documents (final staff report/final rule language) is being provided

to the Governing Board prior to the hearing and posted on the District’s web page.

VIII. REFERENCES

1. 40CFR52.21

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ATTACHMENT A

PROPOSED RULE 3.24, PREVENTION OF SIGNJFICANT DETERIORATION

STRIKE-OUT UNDERLINE VERSION

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