SUBJECT:

FROM:

TO: UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION Ill 1650 Arch Street Philadelphia, Pennsylvania 19103-2029

Virginia Dept. ofEnvironmental Quality PSD/NNSR SIP Revision Requests
David Talley

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### TectW{~al ssessment Branch AirProtection Division**;~/** /' Kathleen Cox, Associate Director/ 

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Office ofPermits and Air Toxics

Approval and Promulgation ofAir Quality Implementation Plans; Virginia; Prevention ofSignificant Deterioration and NonattainmentNew Source Review; Fine Particulate Matter (PM2.s)

I. Background

EPA is proposing to approve revisions to the Virginia State Implementation Plan (SIP), submitted bythe Virginia Department ofEnvironmental Quality (VADEQ) on August 25, 2011. These revisions pertaining to Virginia's Prevention ofSignificant Deterioration (PSD) and nonattainment New Source Review (NSR) programs incorporate preconstructionpermitting regulations for fine particulate matter (PMzs) into the Virginia SIP. A previous PSDprogram approval ofVirginia's Chapter 80, Article 8 regulations was provided to the Commonwealth as a "limited approval" for reasons that will not deny this action as being fully approved. In addition, EPA is approving these revisions and portions ofother related submissions for the purpose of determining that Virginia has met its statutory obligations withrespect to the infrastructure requirements ofthe Clean Air Act (CAA) which relate to Virginia's PSD permittingprogram and
are necessary to implement, maintain, and enforce the 1997 8-hour ozone and PM2.sNational Ambient Air Quality Standards (NAAQS), the 2006 PM2.sNAAQS, and the 2008 lead NAAQS. EPA is approving these revisions in accordance withthe requirements ofthe Clean Air Act (CAA).

II. Summary ofAction
The SIP revision submittedbyVADEQ consists ofamendments to the major NSRpermitting regulations ofArticles 8 and 9 of9V AC5 Chapter 80. The revision fulfills the federal program requirements established bythe EPA rulemaking actions discussed above. The amendments establish the major source threshold, significant emissionrate and offsetratios for PMz.s, andestablish an allowance for interpollutant trading for offsets and NSR applicabilityto PM25 precursor pollutants, pursuant to the May 2008 NSR PM25 Rule. In addition, the amendments add maximum allowable increases in ambient pollutant concentrations (increments) pursuant to the October 2010 PSD PMz.s Rule. Several minor administrative revisions were made as well. Virginia's proposed SIP revision does not include the "grandfathering" and presumptively approvable interpollutant trading ratio provisions that have subsequentlybeen repealed/reconsidered.
The amendments submitted by VADEQ for approval into the SIP were adopted by the State Air Pollution Control Board on June 10, 2011, and effective on August 17,2011. They include revisions to the general definitions under Chapter I0 of9VACS (specifically 9VACS-10-30), as well as to Articles 8 (PSD) and 9 (nonattainment NSR) under Chapter 80 of9VAC5. The following regulations under Article 8 are revised: 9VAC5-80-1615 (Definitions), 9VAC5-80- !635 (Ambient Air Increments), and 9VAC5-80-1765 (Sources Affecting Federal Class I Areas -Additional Requirements). Under Article 9, the regulations at 9VAC5-80-2010 (Definitions) and 9VAC5-80-2120 (Offsets) have been amended. Therevisions submitted byVirginia also include SILs pursuant 

### to the October 20, 2010 PMz.s PSD Rule (See 9VAC5-80-1715 (Source Impact Analysis)). EPA is taking no action with respect to the SILs. For further discussion, see below.


### III. Analysis

A. PM2.s Fine particles in the atmosphere are made up ofa complex mixture ofcomponents. Common constituents include sulfate (S04); nitrate (N03); ammonium; elemental carbon; a great variety oforganic compounds; and inorganic material (including metals, dust, sea salt, and other trace elements) generally referred to as "crustal" material, although it may contain material from other sources. Airborne particulate matter (PM) with a nominal aerodynamic diameter of2.5 micrometers orless (amicrometer is one-millionth ofa meter, and 2.5 micrometers is less than one-seventh the average width ofa human hair) are considered to be "fineparticles" and are also known as PMz.s. "Primary" particles are emitted directly into the air as a solid orliquid particle (e.g., elemental carbon from diesel engines or fire activities, or condensable organic particles from gasoline engines). "Secondary"particles (e.g., sulfate and nitrate) form in the atmosphere as a result ofvarious chemical reactions.
The health effects associated with exposure to PM2
.5 include potential aggravation ofrespiratory and cardiovascular disease (i.e., lung disease, decreased lung function asthma attacks and certain cardiovascular issues). Epidemiological studies have indicated a correlation between elevated PM2
.5 levels and premature mortality. Groups considered especially sensitive to PM2
.5 exposure include older adults, children, and individuals with heart and lung diseases. For more details regarding health effects and PMz.s see EPA's Web site at http://v.ww.epa.gov/oarlparticlepollution/ (see heading "Health and Welfare").
On July 18, 1997, EPA revised the NAAQS for PM to add new standards for fine particles, using PM25 as the indicator. Previously, EPA used PM 10 (inhalable particles smaller than or equal to I0 micrometers in diameter) as the indicator for the PM NAAQS. EPA established health-based

2(primary) annual and 24-hour standards for PM2.s, setting anannual standard at a level ofI 5 micrograms per cubic meter (!lg/m3) and a 24-hour standard at a level of65 11g/m3 (62 FR 38652). At the time the 1997 primary standards were established, EPA also established welfarebased (secondary) standards identical to the primary standards. The secondary standards are designed to protect against major environmental effects ofPM2.s, such as visibility impairment, soiling, and materials damage. On October 17, 2006, EPA revised the primary and secondary NAAQS for PM2.s. In that rulemaking, EPAreduced the 24-hourNAAQS for PM2.s to 35 11g/m3 and retained the existing annual PM2.s NAAQS ofIS 11g/m3 (71 FR 61236).
1. Implementation ofNSR Requirements for PM2.5 - the NSR PM2.5 Rule
After EPA promulgated the NAAQS for PM2
.5 on October 23, 1997, the Agency issued a guidance document written byJohn Seitz entitled "Interim Implementation ofNew Source Review Requirements for 

### PMz.s" (Seitz Memo). The Seitz Memo was designed to help states implement NSRrequirements pertaining to the new PM2.s NAAQS in light oftechnical difficulties posedby

### PMz.s at that time. Specifically, the Seitz Memo stated: 

### "PMw may properlybe used as a surrogate for 

### PMz.s in meeting NSRrequirements until these difficulties are resolved."

EPA also issued a guidance document entitled "Implementation ofNew Source Review Requirements in 

### PMz.s Nonattainment Areas" (the "2005 PM2

.5 Nonattainment NSR Guidance"),
on April 5, 2005, the date that EPA's 

### PMz.s nonattainment area designations became effective for the 1997 NAAQS. This memorandum provided guidance on the implementation ofthe nonattainment major NSRprovisions in PM2.s nonattainment areas in the interim period between the effective date ofthe 

### PMz.s nonattainment area designations (April 5, 2005) and EPA's promulgation offinal 

### PMz 5 nonattainment NSR regulations. Besides re-affirming the continuation ofthe 

### PMw Surrogate Policy for PM2

.5 attainment areas set forth in the Seitz Memo, the 2005 PM2
.5 nonattainment NSR Guidance recommended that until EPA promulgated the PM2
.5 majorNSR regulations, "States should use a PM 10 nonattainment majorNSR program as a surrogate to address the requirements ofnonattainment majorNSR for the 

### PMz.s NAAQS."
On May 16, 2008, EPA finalized a rule (the NSR PM2
.5 Rule) to implement the 1997 PM2.s NAAQS, including changes to the NSRprogram (73 FR 28321). The 2008 NSR 

### PMz.s Rule revised the NSRprogram requirements to establish the framework for implementing preconstruction permit review for the 

### PMz.s NAAQS in both attainment and nonattainment areas. The 2008 NSR PM2.s Rule required that major stationary sources seeking permits must directly satisfy the 

### PMz.s requirements, as ofthe effective date ofthe rule, rather than relying on 

### PMw as a surrogate, with two exceptions. The first exception was a "grandfathering"provision inthe Federal PSD program at 40 CFR 52.21(i)(l)(xi). This grandfathering provision applied to sources that had applied for, buthad not yet received, a final and effective PSD permitbefore the July 15, 2008, effective date ofthe May2008 final rule. The second exception was that states with SIP-approved PSD programs could continue to implement the Seitz Memo's 

### PMw Surrogate Policy for up to three years (until May 2011) oruntil the individual revised state PSD programs for 

### PMz.s are approved by EPA, whichever came first. For additional information on the NSRPM2
.5 Rule, see (73 FR 28321). On February II, 2010, EPA proposed to repeal the grandfathering provision for PM2.s contained in the federal PSD program at 40 CFR

352.21(i)(l)(xi) and to end earlythe PM 10 Surrogate Policy applicable in states that have a SIP approved PSD program (75 FR 6827). In support ofthis proposal, EPA explained that the PM2.s implementation issues that led to the adoption ofthe PM 10 Surrogate Policy in 1997 have been largelyresolved to a degree sufficient for sources and permitting authorities to conduct meaningful permit-related PM2

.5 analyses. The repeal ofthe grandfathering rule was finalized on May 18, 2011 (76 FR 28646).

The 2008 NSR PM2.s Rule also established the following NSRrequirements to implement the PM2

.5 NAAQS: (1) Require NSRpermits to address directly emitted PM2.s and precursor pollutants; (2) establish significant emission rates for direct PM2.s and precursor pollutants (including sulfur dioxide (S02 ) and oxides ofnitrogen (NOx)); (3) establish PM2.s emission offsets; and (4) require states to account for gases that condense to form particles (condensables) in PM2.s emission limits. Additionally, the 2008 final rule authorized states to adopt provisions in their nonattainment NSRrules that would allow major stationary sources and majormodifications locating in areas designated nonattainment for PM2.s to offset emissions increases ofdirect PM2

.5 emissions or PM2 .s precursors with reductions ofeither direct PM2

. 5 emissions or PM2.s precursors in accordance with offset ratios contained in the approved SIP for the applicable nonattainment
area. The inclusion, in whole orin part, ofthe interpollutant offset provisions for PM2.s is discretionary on thepart ofthe states. In the preamble to the 2008 final rule, EPA included preferred orpresumptive offset ratios, applicable to specific PM2

.5 precursors that states may adopt in conjunction with the new interpollutant offsetprovisions for PM2.s, and for which the state couldrely on the EPA's technical work to demonstrate the adequacy oftheratios for use in any PM2 .s non attainment area. Alternatively, the preamble indicated that states may adopt their own ratios, subject to the EPA's approval, that would have to be substantiated bymodeling
or other technical demonstrations ofthe net air quality benefit for ambient PM2 .s concentrations. The preferred ratios were subsequentlythe subject ofa petition for reconsideration, whichthe Administrator granted. EPA continues to support the basic policy that sources may offset increases in emissions ofdirect PM2.s or ofany PM2.s precursorin a PM2

.5 nonattainment area with actual emissions reductions in direct PM2.s or PM2.s precursors in accordance with offset ratios as approved in the SIP for the applicable nonattainment area. However, we no longer consider the preferred ratios set forth in the preamble to the 2008 final rule for PM2

.5 NSRimplementation to be presumptively approvable. Instead, any ratio involving PM2

.5 precursors adopted bythe state for use in the interpollutant offset program for PM2 .s nonattainment areas mustbe accompanied by a technical demonstration that shows the net air quality benefits ofsuch ratio for the PM2 .s nonattainment area in which it will be applied.
2. PSD 

### PMz.s Rule

On October 20,2010 (75 FR 64865), EPA promulgated the final "Prevention ofSignificant Deterioration (PSD) for Particulate Matter less than 2.5 Micrometers (PM2.s)- Increments, Significant Impact Levels (SILs) and Significant Monitoring Concentration (SMC)" (PSD 

### PMz.s Rule). That rulemaking finalized certain program provisions underthe regulations to prevent significant deterioration ofair quality due to emissions ofPMz.s 

### (i.e., under the 

### PMz.s PSD

4regulations). This final rule supplemented the final implementation rule for 

### PMz.s, known as the Clean Air Fine Particle Implementation Rule (CAFPIR) that we promulgated on April25, 2007 (72 FR 20586), and the PM2
.5 NSRImplementation Rule that we promulgated onMay 16, 2008 (73 FR28321). Together, these three rules established a regulatory framework for implementation ofa PM25 program in any area. This final rule established increments, SILs, and
an SMC for PMz.s to facilitate ambient air quality monitoring and modeling under the PSD regulations for areas designated attaimnent orunclassifiable for PM25• Below is a brief discussion ofIncrements, SILs, and SMCs. A more detailed discussion canbe found in the preamble to the final PSD PMz.s Rule.



### a. Increments

An increment is the maximum allowable level ofambient pollutant concentration increase that is allowed to occur above the applicable baseline concentration in a particular area. As such, an increment defines "significant deterioration." The October 2010 rulemaking established increments for PMz.spursuant to the legal authority contained in section 166(a) ofthe CAA for pollutants for whichNAAQS are promulgated after 1977. As discussed inthat final rulemaking action, the increments for PM25became applicable on October 20, 2011 in order to comply with section 166(b) ofthe Act. This final rule did not revoke the annual increments for particulate matter less than I0 micrometers (PM 10) as proposed under Option 1 in the 2007 notice of proposed rulemaking. Thus, we retained the 24-hour and annual PMw increments in addition to adding PM25 increments.


### b. Significant Impact Levels (SILs)

The October 20I0 rulemaking also established SILs for PMz.s for evaluating the impact a proposed new source or modification may have on the NAAQS and PSD increments for PM2
.5
. Itis EPA's longstanding policy to allowthe use ofthe SILs as de minimis thresholds under the NSRprograms at 40 CFR 51.165(b) and part 51, Appendix S, to determine whether the predicted ambient impactresulting from the emissions increase at a proposed major new stationary source ormodification is considered to cause or contribute to a violation ofthe NAAQS. We have also allowed the SILs under the PSD program to determine: (I) When a proposed source's ambient impacts warrant a comprehensive (cumulative) source impact analysis; (2) the size ofthe impact
area within which the air quality analysis is completed, and (3) whether the emissions increase from a proposed new major stationary source ormajor modification is considered to cause or contribute to a violation ofany NAAQS. The SILs for PMz.s were developed by scaling the existing PM 10 SILs using a PMz.s-to-PMw NAAQS ratio.



### c. Significant Monitoring Concentration (SMC) Finally, the October 2010 rulemaking established the SMC for PM2.s as 4 !J.glm 3 PM2

_ 5 (24-hour average). EPA and its delegated reviewing authorities use the PM25 SMC to determine when it may be appropriate to exempt a proposed new major stationary source or major modification from the ambient monitoring data requirements under the PSD rules. Similarly, states with EPAapproved PSD programs that adopt the SMC for 

### PMz.s may use the SMC, once it is part ofan approved SIP, to determine when it may be appropriate to exempt a particular major stationary

5source ormajor modification from the monitoring requirements under their State PSD programs (See 40 CFR 51.166(i)(S)).

. The revisions submittedbythe State ofVirginia to address the new PSD requirements for PM2.s pursuant to the EPA's October 20,2010 final rule include the new regulatory text at 40 CFR 51.166(k)(2), concerning the implementation of"significant impact levels" (SILs) for PMn (See, 9VACS-80-1715 (Source Impact Analysis)). We stated inthe preamble to the 2010 final rule that we do not consider the SILs to be a mandatory SIP element, butregard them as discretionary on the part ofregulating authority for use in the PSD permitting process. Nevertheless, the PMz.s SILs are currently the subject oflitigationbefore the U.S. Court of Appeals (D.C. Circuit). In response to that litigation, the EPAhas requested that the Court remand and vacate the regulatory text in the EPA's PSD regulations at paragraph (k)(2) so that the EPA can make necessaryrulemaking revisions to that text.
In light ofEPA's request for remand and vacatur and our acknowledgement ofthe need to revise the regulatory textpresently contained at paragraph (k)(2) ofsections 51.166 and 52.21, we do not believe that itis appropriate at this time to approve thatportion ofthe State's SIP revision that contains the affected regulatory text in the State's PSD regulations, specifically new paragraph A.2 of9VAC5-80-1715. Instead, we are taking no action at this time with regard to that specific provision contained in the SIP revision.
B. Infrastructure
Whenever a new orrevised NAAQS is promulgated, section 110(a) ofthe CAA imposes obligations upon states to submit SIP revisions that provide for the implementation, maintenance, and enforcement ofthe new or revised NAAQS within three years following the promulgation of such NAAQS

- the so called infrastructure SIP revisions. Although states typicallyhave met many ofthe basic program elements required in section IIO(a)(2) through earlier SIP submissions in connection with previous PM standards, states (including all the EPA Region 3 states) were still required to submit SIP revisions that address section 110(a)(2) for the 1997 and 2006 PM2.s NAAQS. In addition to the August 2011 SIP submission, Virginia has previously submitted SIP revisions addressing requirements set forth in CAA Section 110(a)(2) for the 1997 and 2006 PMz.s NAAQS, including those IIO(a)(2) requirements related to Virginia's PSD and NSRpermitting program. Because these SIP submissions addressed Virginia's compliance with CAA Section 110(a)(2), these SIP submissions are referred to as infrastructure SIP submissions. By submissions dated July 10,2008, September 2, 2008, and April!, 2011, Virginia provided infrastructure SIP submissions which identified how its SIP met several ofthe obligations set forth in CAA Section 110(a)(2) for the 1997 and 2006 PM2
.5 NAAQS. Each ofthese submissions addressed numerous obligations pursuant to 11O(a)(2), including portions of IIO(a)(2)(C), (D)(i)(II) and (J) relating to Virginia's PSD permit program for the 1997 and 2006 PMz.s NAAQS. On October 11, 2011, EPA took final action on all portions ofthese submittals, except for the portions that addressed the obligations set forth in IIO(a)(2)(C), (D)(i)(II) and (J) relating to Virginia's PSD permit program and the portions ofIIO(a)(2)(D)(i)(II) relating to visibility (See 76 FR 62635). Bythis action, EPA is addressing the portions ofVirginia's submissions dated July 10, 2008, September 2, 2008 and April I, 2011 which address the obligations set forth at CAA Sections IIO(a)(2)(C), (D)(i)(II) and (J) relating to the Virginia's

6PSD permit program for the 1997 and 2006 PMz.s NAAQS. Byletters dated November 13,2007 and December 13, 2007, Virginia also submitted SIP revision requests addressing several requirements ofCAA Section 110(a)(2), including all of 110(a)(2)(D)(i) for the 1997 ozone and PMzsNAAQS (November submittal), and 11O(a)(2)(D)(i)(II) for the 1997 ozone NAAQS (December submittal). Bythis action, EPA is also addressing the portions ofVirginia's December 2007 submittal which address the obligations set forth at CAA Sections 110(a)(2)(D)(i)(II) relating to the Virginia PSD permit program, as well as approving the November 13, 2007 submittal. Based onthe November 2007 and December 2007 submissions, the above described submissions and previous SIP submittals, EPA is making a determination that Virginia has met its obligations relating to the PSD permit program pursuant to CAA Section 110(a)(2)(D)(i)(II) for the 1997 ozone NAAQS, as well as all of 110(a)(2)(D)(i) for the 1997 PMzsNAAQS. Additionally, on March 9, 2012, Virginia submitted an infrastructure SIP to address the CAA section 110(a)(2) requirements for the 2008lead NAAQS. Unlike PMz5 , there have been no new PSD program requirements associated with the 2008 lead NAAQS. Based on this submittal,
as well as all ofthe above described submissions, EPA is also making the determination that Virginia has met its obligations relating to the PSD permit program pursuant to CAA sections 11O(a)(2)(C), (D)(i)(II), and (J) for the 2008 lead NAAQS.
Section 110(a)(2)(C) ofthe CAA requires each state's implementation planto "include a program to provide for the enforcement ofthe measures described in [CAA Section 11O(a)(2)(A)), and regulation ofthe modification and construction ofany stationary source within the areas covered bythe plan as necessaryto ensure that national ambient air quality standards are achieved, including a permitprogram as required in parts C [PSD], and D [nonattainment NSR)." Similarly, CAA Section 110(a)(2)(J) requires that for each NAAQS the State's SIP "meet the applicable requirements of

....part C of[Subchapter I) (relating to prevention ofsignificant deterioration ofair quality

... )." As stated earlier, Virginia's PSD and nonattainment programs are currently operating under a limited SIP approval. However, EPA has previously determined that this limited approval will not impair Virginia's ability to enforce its PSD and nonattainment NSR provisions in a manner consistent with federal requirements (See Section III, below). With the addition ofthe PMz.s requirements described above, Virginia's nonattainment NSR and PSD programs contain all ofthe emission limitations and control measures and other program elements required by40 CFR 51.165 and 40 CFR 51.166 related to the PM2
.5NAAQS. Therefore, Virginia's SIP meets the statutory obligations relating to its PSD permit program set forth at CAA Sections 110(a)(2)(C) and (J) for the 1997 and 2006 PM25NAAQS, as well as the 2008 lead NAAQS.
CAA Section 110(a)(2)(D)(i)(II) requires each state's implementation plan to include provisions which will prevent emissions from interfering with the measures required by another state for implementing PSD. Each state's SIP must, under 40 CFR 51.166(k)(1), include a source impact analysis which requires the owner/operator ofeach proposed source ormodification to demonstrate that the allowable emissions increase from the proposed project will not "cause or contribute to air pollution in violation of: (1)Any national ambient air quality standard in any air quality control region (emphasis added)." The requirements set forth at 40 CFR 51.166(k)(l) are

7consistent with, and sufficient to meet, the requirements set forth at CAA Section 11O(D)(i)(Il). In Virginia, the equivalentrequirement is codified at 9VAC5-80-1715, and this requirement is incorporated into the SIP and is applicable to the 1997 ozone NAAQS, the 1997 and 2006 PM2 .s NAAQS, and the 2008 lead NAAQS. Therefore, the previously approved SIP revisions, together with the incorporation ofthe PM2.s requirements described above and the relevant portions of Virginia's September 2008, April2011 and March 2012 infrastructure SIP submittals, support the finding that Virginia has met its statutory obligations under CAA Section 110(a)(2)(C), (D)(i)(II) and (J) for the 1997 and 2006 PM2 .sNAAQS, as well as the 2008 lead NAAQS. Similarly, in light ofthe relevant portions ofthe November 2007 and December 2007 submissions, and because Virginia's SIP includes a provision consistent with 40 CPR 51.166(k) and sufficient to meetthe requirements set forth at CAA Section 11O(D)(i)(II) for the 1997 ozone NAAQS, Virginiahas demonstrated that it has met theportion ofCAA Section 11O(D)(i)(II) which pertainto its PSD permit program for the 1997 ozone NAAQS. Additionally, Virginia has met its obligations with respect to the visibility requirements of 110(a)(2)(D)(i)(II) for all relevant NAAQS byvirtue ofits Regional Haze SIP, which EPA took final action to approve on March 23,2012 (77 FR 16397).
IV. Recommended Agency Action

I find that the proposed revisions are consistent with Federal regulations, and incorporate required program elements into Virginia's PSD and nonattainment NSR programs. Additionally, I find that the August 25, 2011 submittal, in conjunction with the previously submitted infrastructure SIP revisions support a finding that Virginia has met its obligations with respect to CAA section 110(a)(2) as discussed above. Therefore I recommend approval ofthe proposed revisions to the Virginia SIP.

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