COMMENTS OF THE BAY AREA AIR QUALITY MANAGEMENT DISTRICT 

ON EPA PROPOSED RULE 

Proposed Revisions to 40 CFR 52.220 (Identification of Plan)

Federal Register Notice Revisions to California State Implementation Plan; Bay 

Area Air Quality Management District; Stationary Sources Permits

80 FR 52236 (August 28, 2015)

Docket No. EPA-R09-OAR-2015-0280

November 12, 2015

This document provides comments of the Bay Area Air Quality Management District (Air District) 

on the proposal published by the Regional Administrator of EPA Region IX for a limited approval and 

limited disapproval of the Air District’s New Source Review (NSR) rules (hereinafter, the “Proposal”). 

These rules are in Air District Regulation 2, Rules 1 and 2 (Regs. 2-1 and 2-2), as amended most recently 

in December 2012. 

The Air District generally supports EPA’s proposal insofar as EPA proposes to approve the Air 

District’s NSR rules. The District disagrees in some respects with EPA’s proposed limited disapproval, 

however, for the reasons explained in these comments. 

The Air District appreciates the opportunity to provide these comments and looks forward to 

working with EPA in moving to a final decision on its NSR rules. The Air District also appreciates EPA’s 

agreement to provide an extended comment period, as well as EPA’s willingness to discuss EPA’s 

position on these issues with Air District staff during the comment period. EPA’s willingness to assist the 

Air District in this regard has been extremely helpful in providing the Air District with a better 

understanding of EPA’s position, which has helped the District better focus its comments on EPA’s areas 

of concern regarding these NSR rules. 
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TABLE OF CONTENTS

I. The Air District’s Discretion In Developing A Regulatory Program To Satisfy The 

Federal NSR Requirements.............................................................................................. 1

Comment I: EPA Should Ensure That It Is According Appropriate Deference To The Air 

District’s Policy Choices On How To Implement Its NSR Program....................................................2

II. 40 CFR Section 51.160’s Requirements To Prevent Construction of New Sources And 

Modifications That Would “Interfere With Attainment Or Maintenance Of A National 

Standard” ....................................................................................................................... 3

A. 40 CFR Section 51.160 Does Not Require States’ NSR Programs To Conduct A 

Source-Specific Analysis of Each Individual Source’s Emissions And Their Potential 

Impact On Ambient Air Quality................................................................................... 4

Comment II.A.1.: The Requirement to Prevent “Interference With Attainment or 

Maintenance” Of The NAAQS Can Be Satisfied By Showing Non-Interference With The Air 

District’s Regulatory Program That EPA Has Approved For Achieving Attainment And 

Maintenance of the NAAQS .............................................................................................................5

Comment II.A.2.: The “Interference With Attainment or Maintenance of the NAAQS” 

Standard Is Different From the “Cause Or Contribute To A Violation Of The NAAQS” 

Standard...........................................................................................................................................6

Comment II.A.3.: An Interpretation That 40 CFR Section 51.160 Requires A Source-bySource Evaluation Of Each Source’s Emissions and Ambient Air Quality Impacts Would 

Create New Substantive Requirements That Go Beyond What Is Authorized By The Clean 

Air Act...............................................................................................................................................8

Comment II.A.4.: Requiring A Demonstration That New And Modified Sources Will Not 

Contribute To Any NAAQS Exceedance Is Highly Problematic For Areas Where 

Background Concentrations Already Exceed The NAAQS ................................................................9

B. Even If 40 CFR Section 51.160 Did Require Source-Specific Analyses of Individual 

Sources’ Emissions, District Regulation 2-2-308 Would Satisfy Such A Requirement 

Because It Requires An Analysis For All Air District NSR Permits (Above A 

Permissible De Minimis Threshold)........................................................................... 10

Comment II.B.1.: The Federal NSR Program Allows States To Provide De Minimis 

Exemptions Of The Type Provided In Section 2-2-308 Under The Alabama Power Doctrine.........10

Comment II.B.2.: The Thresholds In Section 2-2-308 Use EPA’s Own De Minimis

Thresholds That EPA Adopted for Use In NSR Permitting Under Alabama Power.........................11

Comment II.B.3.: The Air District Also Justified The Thresholds In Section 2-2-308 

Through An Analysis Specific to Local Conditions In The San Francisco Bay Area. ........................13
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C. EPA’s Suggestion That The Air District Should Adopt A Requirement That A SourceSpecific Air Quality Impact Analysis Will Be Required Based Solely On The 

Unfettered Discretion Of The APCO .......................................................................... 15

Comment II.C.: A Vague Open-Ended Requirement Leaving The Decision Of When An 

Analysis Is Required Entirely Up To The APCO’S Sole Discretion Is Not Required, Not 

Appropriate, And Not Legally Supportable ....................................................................................17

D. Remaining Questions Regarding EPA’s Interpretation of 40 CFR Section 51.160......... 17

Comment II.D.: EPA Should Clearly Specify What Is Required Under 40 CFR Section 

51.160, How SIP Submittals Will Be Judged Against That Rule, and Why The Bay Area’s 

NSR Program Does or Does Not Satisfy That Rule .........................................................................18

III. EPA’s Statement That The Air District’s Rules Do Not Satisfy The Requirements in 40 

CFR Section 51.160 To Ensure Compliance With The Air District’s Control Strategy ........ 19

Comment III: District Regulations 2-1-304 and 2-1-321 Ensure That Any New Source Or 

Modification Will Comply With The Control Strategy....................................................................19

IV. EPA’s Proposal to Require “Double-Counting” Of The Amount Of Offsets Required To 

Offset A Facility’s Maximum Emissions Under The Worst-Case Scenario........................ 19

Comment IV.1: The Clean Air Act Only Authorizes EPA To Require Offsets Sufficient To 

Ensure “Reasonable Further Progress” – Which Does Not Allow EPA To Require The Air 

District To “Double-Count” The Amount Of Offsets Required........................................................22

Comment IV.2: District Regulation 2-2-606.2 Is Consistent With 40 CFR Section 

51.165(a)(3)(ii)(J) Under Any Reasonable Interpretation Of That Regulatory Provision ...............24

V. The Clean Air Act’s General Requirement To Ensure That Offsets Are Obtained 

Sufficient To Ensure “Reasonable Further Progress” ...................................................... 31

Comment V.1: Clean Air Act Section 173(a)(1) Requires Local Permitting Authorities To 

Obtain Offsets Sufficient To Achieve RFP – And Not More ............................................................31

Comment V.2: EPA Should Confirm That The Air District Can Satisfy The Clean Air Act’s 

Offsets Requirements By Incorporating By Reference EPA’s Own Offsets Rule In EPA’s 

Federal NSR Program In 40 CFR Part 51, Appendix S.....................................................................31

VI. EPA’s Statement That Offsets Requirements Apply To SO2 As A PM2.5 Precursor............ 32

Comment VI: Non-Attainment NSR Requirements Do Not Apply To SO2 Because SO2

Emissions “Do Not Contribute Significantly to PM2.5 Levels Which Exceed The [NAAQS]” ............32
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VII. Providing Emission Reduction Credits For Shutdowns of Fully Offset Sources ................ 33

Comment VII: EPA Should Approve The Air District’s Rule For Establishing The Baseline 

For Determining The Amount Of ERCs Generated From Fully Offset Sources, Which EPA 

Has Approved In The Past And Which Is Authorized Under EPA’s NSR Regulations......................35

VIII. EPA’s Proposal To Disapprove The Air District’s Threshold For Conducting A Class I 

Area Visibility Impacts Analysis..................................................................................... 37

Comment VIII.1.: The Air District’s 100 km Threshold Is An Appropriate Way To Define 

What Sources “May Have An Impact On Visibility” In A Class I Area ............................................38

Comment VIII.2.: EPA Should Explain Its Interpretation Of What Section 51.307(b)(2) 

Requires And How Much Discretion It Believes Local Permitting Authorities Have Under 

That Section ...................................................................................................................................40

IX. Legal Effect of Any “Limited Disapproval” on Federal Enforceability of the Air District’s 

NSR Program Provisions................................................................................................ 40

Comment IX: If EPA Finalizes a Limited Approval and Limited Disapproval, EPA Should 

Explain That The Air District’s NSR Regulations In Their Entirety Are Effective As Federally 

Enforceable NSR Requirements, Subject To A Requirement For The Air District To Submit 

Revisions To Address Any Deficiency Items....................................................................................41

INCORPORATION BY REFERENCE OF CITED DOCUMENTS

The Air District incorporates by reference all of the supporting documents discussed herein in 

connection with specific comments (including the March 15, 2012 and July 26, 2012 comments that EPA 

submitted during the Air Districts rule development process for the most recent version of the NSR 

rules, and all of the Air District’s responses to those comments). EPA already has copies of most of these 

documents through previous correspondence with the Air District, and any others are readily available 

on the internet. The Air District is therefore not providing additional copies with these comments. If 

EPA would like copies of any of these materials, the Air District will be happy to provide them.
1

I. THE AIR DISTRICT’S DISCRETION IN DEVELOPING A REGULATORY PROGRAM TO SATISFY 

THE FEDERAL NSR REQUIREMENTS 

At the outset, the Air District wants to ensure that EPA recognizes the primary role that the 

Clean Air Act grants to local permitting authorities to design their own regulatory programs to 

implement the federal NSR program requirements. Under the Clean Air Act’s “cooperative federalism” 

approach, it is up to the states and their local permitting authorities in the first instance to decide on the 

most appropriate way to implement the federal NSR program. EPA’s role is simply to determine 

whether the local permitting authority’s choices satisfy or do not satisfy the federal NSR program 

requirements. As long as the agency’s regulatory program satisfies the federal requirements, then EPA 

is required to approve it, even if EPA would choose to implement the requirements in a different 

manner or believes that some alternative approach is preferable. 

This principle of state primacy in making policy choices regarding how to implement NSR has 

been affirmed repeatedly by the federal courts. As the Firth Circuit has recently explained:

The states have “wide discretion” in formulating their SIPs, Union Elec. Co. v. EPA, 427 

U.S. 246, 250, 96 S. Ct. 2518, 49 L. Ed. 2d 474 (1976), including the “broad authority to 

determine the methods and particular control strategies they will use to achieve the 

statutory requirements.” BCCA Appeal Grp., 355 F.3d at 822 (citing Union Elec. Co., 427 

U.S. at 266 (“So long as national standards are met, the state may select whatever mix 

of control devices it desires.”)). Once a state creates or revises a SIP, it is submitted to 

the EPA for review. 42 U.S.C. §§ 7410(a)(1),(k)(1)-(2). The Act confines the EPA to the 

ministerial function of reviewing SIPs for consistency with the Act’s requirements. Id. 

at § 7410(k)(3). The EPA must approve the plan in its entirety if it meets the applicable 

requirements of the Act. Id. at § 7410(k)(3); Fla. Power & Light Co. v. Costle, 650 F.2d 

579, 587 (5th Cir. 1981).

Luminant Generation Co. LLC v. United States EPA, 714 F.3d 841, 845-46 (5

th Cir. 2013) (emphasis 

added). Similarly, the Eleventh Circuit explained this framework as follows:

The Clean Air Act thus provides a cooperative federalism approach to air quality 

regulation. See Fla. Power & Light Co. v. Costle, 650 F.2d 579, 581 (5th Cir. 1981)

(“Congress chose a balanced scheme of state-federal interaction to implement the goals 

of the [Clean Air] Act.”). Under this approach, states have “primary responsibility for 

ensuring that the ambient air meets the NAAQS for the identified pollutants,” Ky. Res. 

Council, Inc. v. EPA, 467 F.3d 986, 988 (6th Cir. 2006), and “so long as the ultimate effect 

of a State’s choice of emission limitations is compliance with the national standards for 

ambient air, the State is at liberty to adopt whatever mix of emission limitations it 

deems best suited to its particular situation,” Train v. NRDC, Inc., 421 U.S. 60, 79, 95 S. 

Ct. 1470, 1482, 43 L. Ed. 2d 731 (1975). “The great flexibility accorded the states under 

the Clean Air Act is . . . illustrated by the sharply contrasting, narrow role to be played 

by the EPA.” Fla. Power & Light Co., 650 F.2d at 587. If the SIP revision meets the 
2

requirements in the Clean Air Act, the EPA must approve it. See 42 U.S.C. § 7410(k)(3)

(“[T]he Administrator shall approve [a SIP or SIP revision] as a whole if it meets all of the 

applicable requirements of this chapter.” (emphasis added)).

Alabama Envt’l Council v. United States EPA, 711 F.3d 1277, 1280 (11th Cir. 2013) (emphasis added; 

footnote omitted).

EPA undoubtedly understands this principle as a matter of general practice. In some aspects, 

however, EPA’s Proposal seems based on a concern that the Air District’s rules do not implement certain 

federal NSR requirements in EPA’s preferred manner, rather than on a finding that they do not satisfy a 

federal NSR program requirement. For example, with respect to certain items in the proposal, EPA’s 

justification for its position (both in the published Proposal documents and in subsequent informal 

communication with EPA Region IX staff) has been based primarily on suggestions of a different way to 

implement a program element, rather than on an identification of what the federal NSR rules require 

and an explanation of why EPA believes that the Air District’s rule does not satisfy that requirement. 

The Air District is committed to complying with all federal NSR program requirements, and it 

realizes that its discretion to make policy choices about how to implement NSR is limited by the 

boundaries of the federal requirements.1 But in order to understand EPA’s position on what those 

boundaries are, EPA needs to make any disapproval decision based on a clear delineation of what the 

federal NSR rules require and why the Air District’s program may be deficient. Moreover, if EPA finds 

that the Air District’s rules are deficient in some way, then EPA should provide a clear understanding of 

what the Air District needs to do to revise its rules – and what standards EPA will use to judge whether 

any subsequent revision satisfies the federal program requirements – in order for the Air District to 

make appropriate revisions. It is helpful for EPA to provide examples of approaches that EPA considers 

acceptable. But it is even more important for EPA to describe the parameters that define what EPA can 

and cannot approve under the federal NSR rules, so the District knows what specific standards it will 

have to meet when crafting a revised program for submission to EPA.

Comment I: EPA Should Ensure That It Is According Appropriate Deference To The Air 

District’s Policy Choices On How To Implement Its NSR Program

In making a final decision on the Proposal, EPA should ensure that it has considered the 

deference owed to the Air District in making policy choices on how to implement its NSR program. EPA 

should ensure that any disapproval decisions are made only after carefully considering what the federal 

NSR requirement at issue is, and whether the Air District’s approach falls within the discretion that the 

District has to adopt its own policies, within the bounds of the federal requirements. Furthermore, the 

Air District requests that any disapproval decisions be made based on (i) a clear explanation of what the 

federal regulation requires; (ii) a description of how specifically the Air District’s rule does not satisfy the 

 

1

Indeed, one primary purpose of the Air District’s most recent NSR Amendments in 2012 was to better implement 

those federal requirements. EPA Region IX staff were extremely helpful during that amendment process in 

identifying a number of deficiencies, which allowed the Air District to strengthen its NSR rules accordingly. The Air 

District greatly appreciates this advice and input.
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federal requirement; and (iii) an outline of the standards under which EPA will judge any revised 

submission, in order that the Air District can understand how to craft a revised submittal that EPA will be 

able to approve. A final decision that contains such information will help to continue the cooperative 

approach to developing the Air District’s NSR rules in which EPA staff have provided invaluable insight 

and guidance over the past several years. 

II. 40 CFR SECTION 51.160’S REQUIREMENTS TO PREVENT CONSTRUCTION OF NEW 

SOURCES AND MODIFICATIONS THAT WOULD “INTERFERE WITH ATTAINMENT OR 

MAINTENANCE OF A NATIONAL STANDARD”

40 CFR Section 51.160 requires that State NSR programs must contain procedures to enable the 

permitting agency (i) to determine whether construction of a new source or modification to an existing 

source will result in “interference with attainment or maintenance of a nation standard” (§ 51.160(a)); 

and (ii) to prevent such construction if “[i]t will interfere with attainment or maintenance of a nation 

standard” (§ 51.160(b)). 

EPA stated in its Proposal that the Air District’s NSR Program satisfies these provisions through 

its permit application requirements, which require applicants to document that they will comply with all 

requirements of District regulations, and through its substantive permit requirements, which provide 

that the District will deny an Authority to Construct and Permit to Operate to any new source or 

modification that will not comply with all such requirements. Specifically, EPA stated that these 

requirements satisfy the requirements of 40 CFR Sections 51.160(a) and 51.150(b). As EPA stated:

Sections 2-1-402 and 2-2-401, both concerning permit applications, require applicants to 

provide the District with all information necessary to determine whether the application 

satisfies the requirements of Regulation 2, Rules 1 and 2. Section 2-1-301 prohibits the 

construction of any equipment that may cause emissions of air contaminants, without 

first obtaining an ATC from the APCO. The requirement to obtain a preconstruction 

permit (i.e., an ATC) allows the APCO to prevent construction of a new or modified 

source if it would . . . interfere with attainment or maintenance of a NAAQS which 

satisfies the requirements of 40 CFR 51.160(b).

(TSD § 7.4.1, p. 127 (emphasis added).

2

) 

After confirming that the Air District’s rules comply with these requirements, however, the TSD 

makes a further – and somewhat cryptic – statement, suggesting that these rules do not comply with 40 

CFR Section 51.160(b) because they do not require a source-specific analysis of each source’s individual 

emissions and the impact they might have on ambient air quality. After explaining that the District’s 

rules ensure no interference with attainment or maintenance under 40 CFR Section 51.160, EPA goes on 

 

2

References to the “TSD” in this document refer to the Technical Support Document that EPA published with its 

Proposal. References to EPA’s Federal Register notice for the Proposal are provided by referencing “80 FR . . .” and 

the relevant page and column number within the notice. 
4

to describe the Air District’s new “NAAQS Protection Requirement” in District Regulation 2-2-308. EPA 

makes the following statement regarding Section 2-2-308:

Section 2-2-308 specifies that the District’s APCO shall not issue an ATC for a new or 

modified source or facility that will result in a “significant net increase” in emissions of 

any NAAQS pollutant unless the APCO determines that such increase will not cause or 

contribute to an exceedance of any NAAQS for that pollutant. This demonstration must 

be made using the air quality analysis procedures in Section 2-2-305. Because the 

prohibition on issuing an ATC only applies to new and modified sources that will result in 

a “significant net increase” rather than all projects, this provision does not satisfy the 

requirements of 40 CFR 51.160(a) and is therefore deficient. 

(TSD § 7.4.1, p. 127) EPA goes on to repeat this passage later in the TSD in its “Summary of EPA’s 

Action” (TSD § 11, p. 134) and in its Federal Register notice (80 FR at p. 52239, col. 2-3). EPA adds in its 

“Summary of EPA’s Action” that “[t]his deficiency can be corrected by revising Section 2-2-308 so that 

the prohibition applies to any ATC issued for new or modified units emitting any NAAQS.” (TSD § 11, p. 

134)

It is not entirely clear what EPA intends by these statements. Although the first passage quoted 

above states that the Air District’s rules satisfy Section 51.160, the second quoted passage suggests that 

something else is required. Taking the second passage quoted above at face value, EPA seems to be 

taking a position that the federal NSR program requires local permitting authorities to undertake a PSDstyle, source-specific Air Quality Impact Analysis of the type required by Section 2-2-308 for every NSR 

permit issued for every new or modified source for every NAAQS pollutant it emits in any amount, no 

matter how small the source’s emissions. In subsequent telephone conversations with EPA Region IX 

staff, staff suggested this may not in fact be EPA’s position.3 But EPA has not provided any further 

explanation of exactly what it interprets 40 CFR Sections 51.160(a) and 51.160(b) to require in this 

context.

The Air District has the following comments regarding EPA’s statements on this issue. As 

outlined below, the Air District disagrees that there is any way in which its NSR rules are deficient with 

respect to 40 CFR §§ 51.160(a) and (b), either because of the requirements of Section 2-2-308 as written 

or for any other reason. 

A. 40 CFR Section 51.160 Does Not Require States’ NSR Programs To Conduct A 

Source-Specific Analysis of Each Individual Source’s Emissions And Their 

Potential Impact On Ambient Air Quality

As an initial matter, the Air District disagrees that 40 CFR Sections 51.160(a) and (b) require a 

local permitting authority to assess each source’s individual emissions and evaluate what their impacts 

on ambient air quality will be. This is what Section 2-2-308 requires – an analysis of the increase in 

 

3

Teleconference between EPA Region IX staff and BAAQMD staff (Aug. 27, 2015); Telephone call between D. 

Coursen & A. Lyons, EPA, and A. Crockett, BAAQMD (Oct. 7, 2015).
5

ambient pollutant concentrations that will result from the source, and a determination that this increase 

will not cause or contribute to ambient concentrations above the NAAQS – and EPA’s comment suggests

that type of analysis is required by 40 CFR Sections 51.160(a) and (b) for all new and modified sources in 

order to ensure that they will not “interfere with attainment and maintenance of the NAAQS.” The Air 

District disagrees for the following reasons.

Comment II.A.1.: The Requirement to Prevent “Interference With Attainment or 

Maintenance” Of The NAAQS Can Be Satisfied By Showing Non-Interference With The 

Air District’s Regulatory Program That EPA Has Approved For Achieving Attainment 

And Maintenance of the NAAQS

The Air District respectfully submits that EPA Region IX is incorrect to the extent that it is 

suggesting that 40 CFR Section 51.160 requires state plans to require a source-specific analysis of the 

emissions of individual sources and their potential impact on NAAQS compliance. There are other ways 

in which NSR programs can ensure that sources will not “interfere with the attainment or maintenance 

of a [NAAQS].” Specifically, each state’s SIP is required to contain enforceable “measures, rules and 

regulations” that are “adequate to provide for the timely attainment and maintenance of the [NAAQS].” 

(40 CFR § 51.112(a).) Where a state has such measures, rules and regulations that EPA has approved as 

sufficient to attain and maintain the NAAQS, then as long as a source is implementing such measures –

i.e., it is consistent with all such measures and is not interfering with their implementation – then by 

definition the source will not be “interfering with the attainment and maintenance” of the NAAQS under 

the region’s EPA-approved SIP program. 

The Air District’s NSR program satisfies 40 CFR Sections 51.160(a) and (b) in this manner. All 

NSR permit applicants (for both major sources and minor sources) are required to demonstrate that 

they will comply with all Air District regulations. The Air District evaluates all NSR permit applications to 

make sure that they comply, and it is prohibited from issuing NSR permits for any new or modified 

sources if they will not comply. By ensuring that all new and modified sources comply with the rules and 

regulations in the EPA-approved SIP, which EPA has approved as being “adequate to provide for the 

timely attainment and maintenance,” the Air District satisfies the requirement in 40 CFR Section 

51.160(b) to ensure that new and modified sources will not “interfere with the attainment and 

maintenance of a national standard.”

This is the conclusion that EPA reached in the TSD, where it concluded that “[t]he requirement 

to obtain a preconstruction permit (i.e., an ATC) allows the APCO to prevent construction of a new or 

modified source if it would . . . interfere with attainment or maintenance of a NAAQS which satisfies the 

requirements of 40 CFR 51.160(b).” (TSD § 7.4.1, p. 127) The Air District requests that EPA approve its 

NSR rules under Section 51.160(a) and (b) on this basis. EPA cannot disapprove a state’s NSR program 

where it has found that the program satisfies the applicable federal NSR requirements, as discussed 

above in Section I.

Approving the Air District’s NSR rules on this basis would also be consistent with EPA’s recent 

approval of the San Joaquin Valley air district’s exemptions for certain minor NSR sources as compliant 
6

with 40 CFR Section 51.160’s requirement prohibiting sources that will result in interference with 

attainment or maintenance of the NAAQS. EPA explained that it was approval those exemptions based 

on the fact that the emissions from the sources at issue “would be consistent with regional planning 

efforts to attain and maintain the NAAQS.” EPA determined that the San Joaquin Valley air district

satisfies 40 CFR Section 51.160 in allowing these minor sources based solely on their consistency with 

the district’s overall regulatory program to attain and maintain the NAAQS – without any requirement to 

evaluate individual sources and whether they would cause or contribute to a NAAQS exceedance.4 The 

Air District submits that EPA should approve its NSR rules under 40 CFR Section 51.160 using the same 

type of analysis. 

Comment II.A.2.: The “Interference With Attainment or Maintenance of the NAAQS”

Standard Is Different From the “Cause Or Contribute To A Violation Of The NAAQS”

Standard

It appears that EPA’s position may be based on confusion between two similar but substantively 

distinct regulatory phrases used in the federal NSR regulations, (i) “interference with the attainment or 

maintenance of the NAAQS,” and (ii) “causing or contributing to an exceedance of any NAAQS.” The 

first phrase is the one used in Sections 51.160(a) and 51.160(b). It reflects the language used in 40 CFR 

Part 51, Subpart G, regarding the regulatory program that each state must adopt to ensure that it will

attain and maintain the NAAQS.

5

 The second phrase is the one used in the PSD regulations in 40 CFR 

Section 51.166(k) and related PSD provisions. This phrase refers to the type of modeling analysis 

required for PSD permitting and the required demonstration that an individual source’s emissions will 

not result in impacts to ambient air concentrations such that the NAAQS will be exceeded. 

The Air District’s NAAQS Protection Requirement in Section 2-2-308 is of the latter type, which is 

why the Air District purposefully used the “causing or contributing to an exceedance of any NAAQS”

language in that regulation. (See Dist. Reg. 2-2-308, stating that the APCO must determine that any new 

or modified source “will not cause or contribute to an exceedance of any [NAAQS] . . . .”) It appears that 

EPA’s position on Section 2-2-308 may be based on a confusion between this PSD-type requirement, 

which requires an individualized assessment of the source’s emissions and potential ambient air 

impacts, and the type of analysis required under Section 51.160, which requires an assurance that the 

new or modified source will comply with all of the SIP rules and related measures in order to ensure that 

it will not “interfere with attainment or maintenance” of the NAAQS. 

This is apparent from the language that EPA uses throughout the TSD, in which EPA refers to the 

deficiency it perceives with respect to Section 51.160 using the “causing or contributing to an 

exceedance of any NAAQS” language. For example, EPA states in its Federal Register notice that the Air 

 

4

See Approval and Promulgation of Implementation Plans, State of California, San Joaquin Valley Unified Air 

Pollution Control District, New Source Review, Final Rule, 75 FR 26102, 26105 col. 1-3 (May 11, 2010).

5

See, e.g., 40 CFR § 51.112(a) (SIP must contain rules and regulations adequate to provide for timely “attainment 

and maintenance”); 40 CFR § 51.100(n) (defining “control strategy” as the combination of regulatory measures 

designated to achieve “attainment and maintenance”).
7

District’s NSR rules do not satisfy Section 51.160 because they do not prohibit issuance of an Authority 

to Construct for “any projects (i.e., both minor or major modifications) that would cause or contribute to 

a NAAQS violation . . . .” (80 FR at p. 52239, col. 2-3.) EPA similarly states that the Air District’s “rules 

mostly, but do not completely satisfy the regulatory requirements (e.g., preventing construction of all 

projects that will cause or contribute to an exceedance of any NAAQS pollutant in Section 2-2-308).” 

(TSD § 8, p. 132.) And EPA further states that the Air District can cure this perceived deficiency by 

revising Section 2-2-308 so that every new and modified source will be required to demonstrate that it 

“will not cause or contribute to any exceedance of any NAAQS.” (TSD § 11, ¶ 2, p. 134.) 

These statements suggest a misconception that 40 CFR Section 51.160 requires a “cause or 

contribute” analysis of the type required under 40 CFR Section 51.166. That is not the case. These are 

different regulatory requirements using different regulatory language. If EPA had intended to require a 

PSD-style source-specific Air Quality Impact Analysis under Section 51.160, it would have used the 

“cause or contribute” language, it would have done so. The fact that EPA did not use that language 

demonstrates that it intended something different. 

Furthermore, where EPA correctly applies the regulatory terminology that is actually used in 

Sections 51.160(a) and 51.160(b), EPA recognizes that the Air District’s NSR rules do in fact comply with 

those requirements. As EPA states in the TSD, “[t]he requirement to obtain a preconstruction permit 

(i.e., an ATC) allows the APCO to prevent construction of a new or modified source if it would . . . 

interfere with attainment or maintenance of a NAAQS which satisfies the requirements of 40 CFR 

51.160(b).” (TSD § 7.4.1, p. 127) 

EPA should clearly explain its position on this issue in its Final Decision. EPA should make clear 

that the requirements in Section 51.160(a) and 51.160(b) to ensure that new and modified sources do 

not “interfere with attainment or maintenance of the NAAQS” do not mean the same thing as the PSD

requirements to ensure that new and modified sources will not “cause or contribute to a violation of the 

NAAQS.” EPA should further make clear that Sections 51.160(a) and 51.160(b) do not require local 

permitting agencies to undertake a source-specific analysis of each individual source’s emissions and 

their potential impacts on ambient air quality, which is the type of analysis required under the “cause or 

contribute” standard used in 40 CFR Section 51.166.

Furthermore, EPA should approve the Air District’s NSR rules on this issue, based on EPA’s 

correct statement in the TSD that the Air District’s NSR program “allows the APCO to prevent 

construction of a new or modified source if it would . . . interfere with attainment or maintenance of a 

NAAQS.” (TSD § 7.4.1, p. 127) It would be arbitrary and capricious to disapprove the Air District’s NSR 

rules under the “cause or contribute to a violation” standard where the appropriate regulatory standard 

is the “interference with attainment or maintenance” standard, and where EPA has agreed that the Air 

District’s rules satisfy that standard. 
8

Comment II.A.3.: An Interpretation That 40 CFR Section 51.160 Requires A Source-bySource Evaluation Of Each Source’s Emissions and Ambient Air Quality Impacts Would 

Create New Substantive Requirements That Go Beyond What Is Authorized By The 

Clean Air Act

The interpretation of Sections 51.160(a) and (b) expressed in the statements in EPA’s proposal is

troubling in that it would create an entire new source-specific air quality impact analysis requirement for 

minor NSR. The Clean Air Act never envisioned requiring such analyses for sources and modifications 

below the “major” NSR thresholds, and EPA has never (to the Air District’s knowledge) held that such 

analyses are required. The interpretation expressed in EPA’s statements in its Proposal would be an 

unprecedented expansion in the scope of the federal NSR program. 

Perhaps even more troubling, this interpretation would also create a new source-specific air 

quality impact analysis requirement for major Non-Attainment NSR as well. Section 51.160 applies to a 

local permitting authority’s entire NSR program, including NSR permitting for sources below the major 

source thresholds in Sections 51.165 and 51.166 as well as for sources above those thresholds.6 Any 

requirement that the permitting authority must conduct PSD-style source-specific air quality impact 

analyses under Section 51.160 would therefore apply to “major” NSR permitting as well. And although 

such analyses are required for attainment pollutants under the PSD program, EPA has never required 

such analyses as part of its Major Non-Attainment NSR program. The Air District is not aware of 

anything in the Clean Air Act that would authorize doing so. 

EPA should therefore make clear in its Final Decision that 40 CFR Sections 51.160(a) and 

51.160(b) do not require a source-specific air quality impact analysis. Such PSD-style analyses of 

individual sources’ emissions are not required outside of the PSD program under 40 CFR Section 51.166. 

Specifically, they are not required in order to ensure that the new or modified source will not “interfere 

with attainment or maintenance” of the NAAQS under 40 CFR Sections 51.160(a) and 51.160(b). 

 

6

Although EPA generally refers to the requirements in Sections 51.160 through 51.164 as the “Minor NSR” 

program as if it were a separate regulatory program, in substance there is no such distinction in the regulations. 

There are no exclusions in Sections 51.160-51.164 stating that the requirements in those sections do not apply to 

construction of sources or modifications that exceed the “major” thresholds in Sections 51.165 and 51.166. To the 

contrary, those provisions apply to all permits issued under the NSR program adopted under 40 CFR Part 51, 

Subpart I (which includes Sections 51.160-51.164 and Sections 51.165 and 51.166). Moreover, many of the 

requirements in Sections 51.160 through 51.164 clearly apply to “major” NSR, such as the public notice 

requirements in Section 51.161. There are no independent public notice provisions required under Section 51.165, 

and so if Section 51.161 did not apply to permitting of major new sources and major modifications, then there 

would be no public notice requirements whatsoever applicable to major non-attainment NSR permitting. For all of 

these reasons, Subpart I is clear that whatever requirements in Section 51.160 apply to “Minor NSR” must also 

apply to “Major NSR.” Section 51.160 applies to all NSR permitting.
9

Comment II.A.4.: Requiring A Demonstration That New And Modified Sources Will Not 

Contribute To Any NAAQS Exceedance Is Highly Problematic For Areas Where

Background Concentrations Already Exceed The NAAQS 

Furthermore, EPA’s implication that 40 CFR Sections 51.160(a) and 51.160(b) require an analysis 

of each new or modified source’s emissions and their impact on NAAQS compliance would be very 

troubling in areas where background concentrations are already in violation of the NAAQS. Such an 

interpretation would create a de facto prohibition on permitting minor sources in those areas.

7

 

In area where background concentrations are already above the NAAQS, any new emissions, 

even small emissions from minor sources, will be contributing to the existing NAAQS exceedance to 

some extent. A requirement that local permitting authorities must analyze all such emissions, and must 

prohibit construction where they would contribute to an existing violation, would therefore effectively 

create a moratorium on permitting any new minor sources in such areas. 

The NSR program was clearly not designed to impose such a prohibition. To the contrary, it was 

always intended to allow a certain amount of growth from new and modified minor sources, even in 

non-attainment areas. That is why the language used in Section 51.160(a) and 51.160(b) refers to 

“interfere with attainment and maintenance of the NAAQS” rather than “cause or contribute to a 

violation of the NAAQS.” 

During discussions with EPA Region IX staff, it was suggested that minor sources could 

potentially avoid this result by providing offsetting emission reductions so that there is no net increase 

in overall regional emissions as a result of the new or modified source. But this would effectively be 

importing the major NSR offsets requirements into minor NSR permitting, which is not what the Clean 

Air Act or EPA’s NSR regulations intended or allow for. The Clean Air Act is clear that offsets can be 

required for major sources and major modifications only.

For all of these reasons, EPA should clearly state in its Final Decision that 40 CFR Sections 

51.160(a) and 51.160(b) do not require a PSD-style air quality impact analysis that examines each

individual new and modified source’s emissions and what impacts those emissions may have on NAAQS 

compliance. EPA should make clear that this is not required in order to ensure that the source will not 

“interfere with attainment or maintenance” of the NAAQS, and that it is not a practicable approach to 

evaluating new and modified sources in non-attainment areas. 

 

7

There are no such areas in the San Francisco Bay Area, as we have “clean data” demonstrating compliance with

all NAAQS as a factual matter, even though the region is still administratively designated as “non-attainment” for 

the 8-hour ozone standard and the 24-hour PM2.5 standard. See footnote 22 below. Many other areas of 

California and the rest of the country do have background concentrations above the NAAQS, however. If EPA is 

suggesting that it will require individualized analyses of each new or modified source’s emissions and their impacts 

on NAAQS compliance, presumably EPA is intending to apply the same interpretation to other areas in the same 

manner.
10

B. Even If 40 CFR Section 51.160 Did Require Source-Specific Analyses of 

Individual Sources’ Emissions, District Regulation 2-2-308 Would Satisfy Such A 

Requirement Because It Requires An Analysis For All Air District NSR Permits 

(Above A Permissible De Minimis Threshold)

The Air District’s NSR rules are premised on an assumption that 40 CFR Section 51.160 is

satisfied by requiring all new and modified sources to comply with all of the District’s rules and 

regulations in its EPA-approved SIP program for ensuring attainment and maintenance of the NAAQS. 

As explained in the Air District’s Staff Report for the 2012 Amendments, the District adopted the NAAQS 

Protection Requirement in Section 2-2-308 in order to go above and beyond this minimum requirement 

of the federal NSR program.8 The Air District submits that a PSD-type source-specific analysis 

requirement of the type specified in Section 2-2-308 is not required under 40 CFR Section 51.160, for all 

of the reasons outlined in Section II.A. above. 

To the extent that such an analysis were required by 40 CFR Section 51.160, however, the 

NAAQS Protection Requirement in Section 2-2-308 would satisfy any such requirement. EPA should 

therefore approve the Air District’s NSR program as satisfying 40 CFR Section 51.160 even if it disagrees 

with the comments discussed above in Section II.A, for a number of reasons. The Air District submits the 

following comments to explain the reasons why in more detail.

Comment II.B.1.: The Federal NSR Program Allows States To Provide De Minimis

Exemptions Of The Type Provided In Section 2-2-308 Under The Alabama Power

Doctrine

EPA’s stated objection as to why the NAAQS Protection Requirement in Section 2-2-308 does 

not satisfy 40 CFR Section 51.160 is that it applies only for new and modified sources above the de 

minimis net emissions increase thresholds specified in the District’s rules (the “significant net increase” 

thresholds). EPA states that in order to satisfy Section 51.160 (under EPA’s stated interpretation), it 

must apply to “any” project. EPA’s stated position is that this requirement needs to be applied for all

NSR permits, and can make no exceptions for de minimis emissions increases. (80 FR at p. 52239, col. 2-

3; TSD § 11, p. 134) 

This position is incorrect as a matter of law. It has been well-settled for many years that the 

Clean Air Act allows states to include de minimis exceptions from NSR permitting requirements. This has 

been repeatedly confirmed by the federal courts, initially in the seminal case of Alabama Power Co. v. 

Costle, 636 F.2d 323, 360-361 (D.C. Cir. 1979), and in any number of subsequent cases. EPA’s policy also

clearly reflects this understanding, as the agency has stated many times. For example, as EPA has stated 

in two recent Federal Register notices: 

[S]tates may exempt from minor new source review certain categories of changes based 

on de minimis or administrative necessity grounds in accordance with the criteria set 

 

8

See Final Staff Report, Updates to BAAQMD New Source Review and Title V Permitting Programs, Regulation 2, 

Rules 1, 2, 4 & 6 (September 26, 2012) (hereinafter, “Staff Report”), § IV.B.3.a., pp. 83-84. 
11

out in Alabama Power Co. v. Costle, 636 F.2d 323, 360-361 (D.C. Cir. 1979). De minimis

sources are presumed not to have an impact and their emissions would not prevent or 

interfere with attainment of the NAAQS, even within nonattainment areas.”

9

 

There is simply no way to support a position that there can be any NSR requirements that must be 

applied to “all” new and modified sources, with no exemption for de minimis sources.

Furthermore, EPA itself advised the Air District during the development of the District’s NSR rule 

revisions in 2012 that it could exclude de minimis sources from the ambient air quality impact analysis 

requirement that was eventually adopted in Section 2-2-308. As EPA stated then, if the Air District were 

to choose to adopt such a requirement to satisfy EPA’s interpretation of 40 CFR Section 51.160, it should 

require modeling for “new and modified sources that will result in a significant net increase in emissions 

. . . .”

10

 EPA has now apparently reversed its position, as it is proposing to disapprove the Air District’s 

NSR rules “[b]ecause the prohibition on issuing an ATC only applies to new and modified sources that 

will result in a ‘significant net increase’ rather than all projects . . . .” There is no basis for this reversal. 

The Air District submits that EPA should make clear in its final decision on the Proposal that the 

requirements of 40 CFR Section 51.160 do contemplate de minimis thresholds – and the exemption of 

sources below such thresholds – consistent with Alabama Power and EPA policy. The Air District further 

requests that, with respect to EPA’s statements that the Air District must apply Section 2-1-308 to all 

sources, EPA clarify that this is not consistent with the federal NSR program, and that 40 CFR Section 

51.160, like the rest of EPA’s NSR regulations, allow states to exclude de minimis sources from their NSR 

programs (for both minor and major NSR).

Comment II.B.2.: The Thresholds In Section 2-2-308 Use EPA’s Own De Minimis

Thresholds That EPA Adopted for Use In NSR Permitting Under Alabama Power

After confirming that the federal NSR program allows states to exempt de minimis sources from

requirements of their NSR programs under Alabama Power, EPA should further confirm that Section 2-2-

308 is approvable because it uses the very same de minimis thresholds that EPA adopted for the federal 

NSR program in the wake of the Alabama Power decision. 

As explained in the Staff Report for the NSR rules currently under review, Section 2-2-308 

requires that every NSR permit for any new or modified source must include an air quality impact 

analysis for every NAAQS pollutant, with the only exception being for permits involving de minimis net 

emissions increases. Section 2-2-308 establishes this de minimis exemption at the levels approved by 

 

9

Approval and Promulgation of Air Quality Implementation Plans; Utah; Revisions to UAC Rule 401–Permit: New 

and Modified Sources, Proposed Rule, 77 FR 37859, 37861 (June 25, 2012); Approval and Promulgation of Air 

Quality Implementation Plans; Montana; Revisions to the Administrative Rules of Montana–Air Quality, Subchapter 

7, Exclusion for De Minimis Changes, Proposed Rule, 76 FR 59338, 59340 (Sept. 26, 2011).

10 See EPA Region 9 Comments on the DRAFT Revisions to BAAQMD Regulation 2, Rules 1 & 2, Attachment to 

Letter from G. Rios, EPA, to C. Lee, BAAQMD (July 26, 2012), at p. 8 (emphasis added).
12

EPA as being sufficiently small that the potential benefits from modeling their impacts on NAAQS 

compliance would not be warranted given the administrative burdens that would be involved.11 

EPA adopted these de minimis threshold levels – which are also referred to as the NSR 

“significance” levels – in the wake of the D.C. Circuit’s decision in Alabama Power, which held that de 

minimis exemptions from NSR requirements are appropriate, but remanded the issue to EPA to 

determine what levels would be appropriate based on a technical analysis. EPA did so, and adopted the 

NSR “significance” levels based on that analysis and the principles laid out by the court in Alabama

Power as explained in detail in the Federal Register and supporting documentation.

12

 These significance 

levels are appropriate exemption thresholds for the NAAQS compliance modeling requirement in 

Section 2-2-308 for the same reasons that EPA found that they were appropriate de minimis exemption 

levels for its federal NSR program. 

Moreover, EPA uses these de minimis thresholds specifically for NSR permitting in the Bay Area. 

These are the thresholds that apply under EPA’s federal PSD program that applies to major sources in 

the Bay Area under 40 CFR Section 52.21, and these are the thresholds that EPA requires the Air District 

to use in permitting such sources under EPA’s Delegation Agreement with the Air District.13 These are 

also the thresholds that EPA applies for major PM2.5 sources in the Bay Area under its federal NonAttainment NSR permitting program set forth in 40 CFR Part 51, Appendix S.14

 It would be arbitrary and 

capricious for EPA to determine that these thresholds are not appropriate for the Air District to use for 

its NSR program in the Bay Area, where EPA has determined that they are appropriate for use under the 

federal NSR program in the Bay Area.

 

11 See Staff Report, supra note 8, § IV.B.3.a., pp. 81-86.

12 Requirements for Preparation, Adoption, and Submittal of State Plans; Approval and Promulgation of 

Implementation Plans, Final Rule, 45 FR 52676, Section XI (“De Minimis Exemptions”) (Aug. 7, 1980). Although 

EPA’s “significance” thresholds were adopted in 1980, EPA has continued to reaffirm their appropriateness and to 

rely on them as de minimis exemption levels under the Alabama Power principle. This point is highlighted both by 

the fact that EPA has not found it necessary to revisit these thresholds since their adoption, as well as EPA’s recent 

statements continuing to treat them as de minimis for NSR purposes. When EPA adopted a de minimis

“significance” threshold for PM2.5 in 2008, for example, it explained that “EPA considers such lower emissions 

increases [i.e., below the “significance” thresholds] to be de minimis . . . .” Implementation of the New Source 

Review (NSR) Program for Particulate Matter Less Than 2.5 Micrometers (PM2.5), Final Rule, 73 FR 28321, 28332 

(May 16, 2008). EPA also noted this fact in 2010 in addressing greenhouse gases under the NSR program, stating 

that “EPA has established significance levels for various pollutants, generally relying on a de minimis basis.” 

Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule, Final Rule, 75 FR 31514, 31560 

(June 3, 2010) (citing August 7, 1980, rulemaking adopting “significance” thresholds). Relying on EPA’s 

“significance” levels as the thresholds for the NAAQS protection requirement in proposed Section 2-2-308 

therefore continues to be consistent with EPA’s approach to modeling emissions impacts for purposes of

evaluating potential NAAQS exceedances. 

13 See Agreement for Partial Delegation of the Federal Prevention of Significant Deterioration (PSD) Program Set 

Forth in 40 C.F.R. Section 51.21 by the United States Environmental Protection Agency, Region 9, to the Bay Area 

Air Quality Management District (March 8, 2011).

14 See 40 CFR Part 51, Appendix S, § II.A.10.i. EPA’s federal program under Appendix S applies for PM2.5 in the Bay 

Area until EPA approves the Air District’s own PM2.5 regulations into the SIP.
13

Using these de minimis thresholds is also consistent with how EPA characterizes them in its 

Proposal. For example, EPA stated in the TSD that “[t]hese [NSR] significance levels, which EPA has 

promulgated for criteria pollutants and certain other pollutants, represent a threshold for a de minimis

contribution to air quality problems.” (TSD § 4.1, p. 4.) Similarly, EPA stated that “[t]hese threshold 

levels are the same as the NSR significant threshold levels in 40 CFR 51.165(a)(1)(x) and 51.166(b)(23) 

which EPA has established as de minimis.” (TSD § 7.4.6, p. 129.) The Air District agrees with these 

statements, and submits that these NSR significance thresholds are appropriate de minimis thresholds 

for use in an NSR program for the same reasons that EPA has concluded that they are appropriate de 

minimis thresholds. 

The Air District also notes that if EPA requires the Air District to use lower de minimis thresholds

under 40 CFR Section 51.160 than EPA requires for the federal PSD requirements under 40 CFR Section

51.166, that would set up two different standards that apply to major sources. Section 51.160 applies to 

all NSR permitting, including permitting of major sources of attainment/unclassifiable pollutants subject 

to Section 51.166,15 and so such major sources would be subject to any analysis requirements of Section 

51.160 as well as the PSD source impact analysis requirements in Section 51.166(k). Holding that 

Section 51.160 requires a lower de minimis threshold than the significance thresholds that apply under 

51.166(k) would be nonsensical, as it would make the major NSR requirements less stringent than the 

minor NSR requirements.

For all of these reasons, EPA should make clear in its Final Decision that these thresholds are 

appropriate for the Air District to use in its NSR program, including any requirements that may apply 

under 40 CFR Sections 51.160(a) and 51.160(b). Furthermore, to the extent that EPA believes that 

Sections 51.160(a) and 51.160(b) require a source-specific ambient air quality analysis, EPA should 

approve the District’s NSR program based on District Regulation 2-2-308 because that regulation’s de 

minimis exemption thresholds are appropriate and justified. EPA should explain that the fact that 

Section 2-2-308 applies only for permits with “significant” net increases is not a deficiency in the Air 

District’s NSR rules.

Comment II.B.3.: The Air District Also Justified The Thresholds In Section 2-2-308 

Through An Analysis Specific to Local Conditions In The San Francisco Bay Area.

EPA should also confirm that the de minimis thresholds used in Section 2-2-308 are justified by 

the analysis that the Air District undertook to determine the extent of the emissions increases that 

would be exempted from the requirement using thresholds set at these levels. 

As the Air District explained in its 2012 Staff Report,16 the Air District conducted a review of all 

NSR permits it has issued over the past 20 years to identify the total amount of emissions that would be 

exempted under these de minimis thresholds. The District then compared the amount of such exempt 

emissions to the Bay Area’s total annual emissions. The District conducted this comparison for each 

 

15 See discussion above in footnote 6.

16 Staff Report, supra note 8, § IV.B.3.a., p. 86.
14

criteria pollutant to determine the percentage emissions increase that would be authorized each year 

under these de minimis exemption levels without having to do a Section 2-2-308 NAAQS compliance 

analysis. The amount of such exempt emissions varies depending on the pollutant involved and the year 

reviewed, but the bottom line is that the total emissions increases from all of the NSR permits issued 

each year that will be eligible for this de minimis exemption will amount to only 0.02% to 0.34% of the 

region’s total emissions inventory.17 Conducting a full modeling analysis to demonstrate NAAQS 

compliance for each of these de minimis permits would not be warranted, given the small overall 

addition to the region’s emissions inventory and the administrative burdens that would be involved. 

This analysis further supports exempting these permits from the Section 2-2-308 requirement under 

Alabama Power v. Costle.

EPA discussed this analysis in its TSD and agreed with its conclusions. As EPA explained: 

[T]he District conducted an analysis of the contribution of sources below these de 

minimis levels in comparison to the Bay Area’s overall emissions of criteria pollutants 

and found that these sources have historically accounted for only 0.02 to 0.34 percent 

of the Bay Area’s total annual emissions (from all sources). The amount of emissions 

from all new and modified permitted sources is only a very small part of the District’s 

emission inventory . . . .

(TSD § 7.4.6, p. 129 (addressing public notice requirements under Section 51.161).) EPA was discussing

the Air District’s analysis in the context of the District’s de minimis exemption thresholds for its public 

notice requirements under 40 CFR Section 51.161, but the same conclusions apply for the de minimis 

exemption thresholds for the Section 2-2-308 NAAQS Protection Requirement. If EPA is going to 

interpret 40 CFR Section 51.160 to require something like the NAAQS Protection Requirement, then it 

should approve the Section 2-2-308 exemption thresholds under 40 CFR Section 51.160 for the same 

reasons it approved the exemption thresholds for the public notice requirements under 40 CFR Section 

51.161. 

Furthermore, EPA has itself adopted Minor NSR de minimis exemption thresholds involving

much larger percentages. In EPA’s 2011 federal NSR rule for Indian Country, the agency adopted 

applicability thresholds that would allow up to 1% of total emissions to avoid all Minor NSR 

requirements – including the requirements to ensure that new and modified sources will not interfere 

with attainment or maintenance of the NAAQS.18 The Air District’s thresholds allowing only 0.02% to 

0.34% are even more stringent than that, and there is no reason why EPA cannot approve them. 

For these additional reasons, EPA should explain in its Final Decision that the fact that Section 2-

2-308 applies only for permits with net increases above the applicable de minimis exemption thresholds 

is not a deficiency in the Air District’s NSR rules. The Air District has provided more than ample 

 

17 See C. Lee, BAAQMD, Analysis of Compliance with 40 C.F.R. Section 51.160(a) & (b) (Aug. 2012).

18 Review of New Sources and Modifications in Indian Country, Final Rule, 76 FR 38748, 38758 (July 1, 2011). EPA 

also noted that many States have exemption thresholds involving even higher thresholds, which EPA has also 

approved. 
15

justification for why the de minimis levels it has adopted are justified for use as applicability thresholds 

for the federal Minor NSR program elements.

C. EPA’s Suggestion That The Air District Should Adopt A Requirement That A 

Source-Specific Air Quality Impact Analysis Will Be Required Based Solely On 

The Unfettered Discretion Of The APCO 

In further discussions of the 40 CFR Section 51.160 requirements after EPA issued its Proposal, 

EPA Region IX staff pointed to regulatory requirements adopted by other agencies that simply state that 

emissions from new and modified sources may not interfere with attainment or maintenance of any 

NAAQS, and then leave it entirely up to the permitting agency’s discretion to determine whether or not 

an analysis of a source’s emissions should be conducted for any particular permit application.19 EPA 

Region IX staff suggested that this is how the Air District should address any concerns about excluding de 

minimis sources from the NAAQS compliance analysis requirement, instead of establishing a bright-line 

de minimis exemption threshold as the Air District has done in Section 2-2-308. 

EPA Region IX staff expressed a view in these discussions that the federal NSR program requires 

local permitting agencies to have a provision requiring a determination that there will be no NAAQS 

exceedance that is nominally applicable to all sources. But they stated that agencies can specify that 

applicants do not actually need to do any analysis to support such a determination in cases where the 

source does not give the agency reason for “concern.” EPA Region IX staff suggested that the decision 

of when such an analysis is required can appropriate be left to the sole discretion of the permitting 

authority (in the case of our agency, the APCO). EPA Region IX staff stated that it is not possible to 

develop a bright-line threshold as to when such a source-specific analysis will be required and when it 

will not be required. They stated that the permitting agency will “just know” when a source presents a 

“concern” and needs to be specifically analyzed, and when a source does not present any concern and 

does not require such an analysis. EPA Region IX staff suggested that the Air District should consider 

adopting this approach to implement Section 51.160. 

The Air District does not find any reason why such an approach is required by Sections 51.160(a) 

and (b). As explained above, the federal NSR program clearly allows for de minimis situations to be 

exempted from NSR requirements. Moreover, it clearly allows for the establishment of bright-line de 

minimis exemption thresholds, and EPA itself has adopted such bright-line thresholds – which are 

exactly the thresholds that the Air District uses in Section 2-2-308. The Air District disagrees that its 

approach of using bright-line thresholds is not allowed by Section 51.160, and disagrees that Section 

51.160 requires that exemption thresholds be left to the absolute discretion of the permitting authority 

to be decided on a case-by-case basis. 

Moreover, the Air District disagrees that such an approach is appropriate from a regulatory 

standpoint. A vague, open-ended requirement like this, which does not specify the applicable standard 

 

19 Teleconference between EPA Region IX staff and BAAQMD staff (Aug. 27, 2015); Telephone conversation 

between A. Lyons, EPA Region IX, and A. Crockett, BAAQMD (Sept. 18, 2015).
16

for decision on when an analysis is required and when it is not, will be difficult to implement for all 

concerned. Regulatory requirements that are not clear on what they require lead to disagreements on 

whether or not they apply in specific situations, which are time-consuming to resolve and can even 

result in litigation. For example, if the APCO believes that an air quality impacts analysis is required 

under a vague provision like this, and the applicant does not, the APCO will have no clear legal basis to 

rely on as to why the analysis is required in that particular situation. Conversely, if the APCO believes 

that an analysis is not required for a particular situation, and members of the community think one 

should be required, the APCO will have no clear standard in the regulation to point to supporting the Air 

District’s decision exempting an applicant from the requirement. Such vague and undefined 

requirements are an impediment to efficient and effective regulation, and the Air District disfavors 

them. 

Furthermore, regulatory provisions such as those that EPA Region IX staff are contemplating are 

not legally valid. It is not permissible to have a requirement to conduct a source-specific air quality 

impact analysis that is entirely up to the discretion of the permitting authority, with no rules or 

guidelines on how that discretion will be exercised. The type of regulation that EPA Region IX staff 

proposed – where the permitting authority will “just know” when an analysis is required and when one 

is not required – is impermissibly vague and does provide the certainty required for an enforceable legal 

mandate. Such a standard does not allow permit applicants or interested members of the public to 

know what is required and when, and it does not allow a reviewing body (i.e., a court or hearing board) 

to judge whether the permitting authority has properly decided on a permit application. 

The courts have made clear that regulatory requirements of this type are not appropriate or 

valid. Indeed, the First Circuit rejected a standard identical to the type that EPA Region IX staff have 

suggested, where the permitting authority simply requires that a source may not interfere with 

attainment or maintenance of the NAAQS but does not specify how that requirement will be applied to 

determine whether to approve or disapprove a specific permit application. As the court stated: 

We are concerned . . . by the standardlessness of subsection (d). The clause permits 

denial of a permit unless the functionary passing on such requests decides that the 

facility “will not interfere with the attainment or maintenance of applicable Federal air 

quality standards . . . .” This . . . may mean anything the permit-giver decides. The 

regulation does not indicate how “interference” is to be judged, nor does it state who 

must bear the burden of showing noninterference. The prospective applicant for a 

permit is utterly without guidance as to what he must prove, and how. And the 

standard is so vague that it invites arbitrary and unequal application.

South Terminal Corp. v. EPA, 504 F.2d 646, 670 (1

st Cir. 1974). 
17

Comment II.C.: A Vague Open-Ended Requirement Leaving The Decision Of When An 

Analysis Is Required Entirely Up To The APCO’S Sole Discretion Is Not Required, Not 

Appropriate, And Not Legally Supportable

For all of these reasons, EPA should specify in its Final Decision that vague requirements such as 

these – which simply state that new and modified sources must not interfere with attainment and 

maintenance of the NAAQS, and do not specify how that determination will be made (or leave it entirely 

up to the permitting authority’s unfettered discretion as to how that determination will be made) – are 

not required by 40 CFR Sections 51.165(a) and (b). EPA should specify that it is appropriate to adopt 

requirements aimed at preventing interference with attainment and maintenance that incorporate

bright-line numerical exemption thresholds. EPA should specify that such de minimis exemptions do not 

have to be written such that the decision on whether a particular application is subject to the 

requirement or exempt from the requirement is based entirely on the permitting authority’s discretion.

Consistent with the South Terminal Corp. case, EPA should also specify that permitting 

requirements which simply say that “new and modified sources may not interfere with attainment or 

maintenance of any NAAQS,” without specifying how the determination of interference will be made, 

are impermissibly vague and not specific enough to be legally appropriate. 

D. Remaining Questions Regarding EPA’s Interpretation of 40 CFR Section 51.160 

The Air District is concerned that EPA has not explained what it believes is required under 40 

CFR Sections 51.160(a) and (b) with sufficient clarity. Furthermore, the Air District is concerned that 

EPA’s Proposal does not provide sufficient guidance as to what EPA believes is required under these 

provisions, and what a local permitting authority such as the Air District needs to do to satisfy them. 

Specifically, the Air District is concerned that EPA’s Proposal leaves open the following important 

questions:

• Why is the District’s approach of ensuring that new and modified sources will not “interfere with 

attainment and maintenance” by requiring compliance with the District’s rules and regulations 

that EPA has approved as being sufficient to demonstrate attainment and maintenance not an 

allowable approach to implementing Sections 51.160(a) and (b)? EPA has stated that local 

agencies enjoy significant discretion in how they will comply with minor NSR requirements (i.e., 

the requirements in Sections 51.160 through 51.164). EPA has also stated that the District’s 

current approach “allows the APCO to prevent construction of a new or modified source if it 

would . . . interfere with attainment or maintenance of a NAAQS . . . .” What restricts the Air 

District’s discretion to comply with 51.160(a) and (b) through its current approach? What 

requirements in the Clean Air Act (or in EPA’s implementing regulations) mandate a different 

approach? What policy or guidance documents does EPA have to support its position on these 

issues?

• If the District’s approach is insufficient, what are the rules for determining what approaches are 

approvable? If the District’s approach is outside the District’s discretion in determining how it 
18

will implement Sections 51.160(a) and (b), what are the limits to the District’s discretion that 

prohibit exercising that discretion in this way? What rules are there in the federal NSR program 

that specify what types of approaches are approvable? Is a NAAQS Compliance Analysis 

approach like the one specified in Section 2-2-308 an allowable approach? Is a vague approach 

like the one described above in Section II.C. an allowable (or mandated) approach? What are 

the rules for determining whether a local permitting authority’s approach satisfies the federal 

NSR program? What are the rules governing how EPA will decide whether to approve or 

disapprove the approach the authority has chosen? 

• Do the federal NSR rules allow for de minimis exemptions consistent with Alabama Power? If so 

(and we presume that EPA will agree that they do), can local permitting agencies use EPA’s own

de minimis thresholds that EPA adopted in the wake of the Alabama Power decision (i.e., the 

NSR “significance” thresholds)? If not, why are local permitting agencies prohibited from using 

these de minimis thresholds, when EPA uses them itself when implementing the federal NSR 

program, both nationally and specifically within the San Francisco Bay Area? And if local 

permitting agencies cannot use these EPA thresholds, what rules apply if they will have to adopt 

their own thresholds? If EPA disagrees that the analysis that the Air District undertook for the 

de minimis thresholds that apply for purposes of Section 2-2-308, why is that analysis 

unacceptable? What are the rules that govern how such an analysis must be undertaken, and 

what about the Air District’s analysis failed to satisfy those rules? 

Comment II.D.: EPA Should Clearly Specify What Is Required Under 40 CFR Section 

51.160, How SIP Submittals Will Be Judged Against That Rule, and Why The Bay Area’s 

NSR Program Does or Does Not Satisfy That Rule 

The Air District submits that EPA should make the answers to the questions outlined above clear 

in its Final Decision, for several reasons. 

First of all, EPA needs to explain what the federal NSR program requires for a local agency’s SIP 

submission, and how the Air District’s rules satisfy do or do not satisfy those requirements, in order to 

make any Final Decision legally supportable. Any determination by EPA to approve or disapprove a state 

program will by definition be arbitrary and capricious if EPA cannot specify the rule of decision that 

governs the determination and how it applied that rule in the particular case under review. 

Furthermore, to the extent that EPA is going to disapprove any elements of the Air District 

program, the District will need to know the rules governing such determinations if it is going to have to 

revise its NSR program in order to re-submit a program that EPA will be able to approve. The Air District 

is committed to ensuring that its NSR program meets or exceeds all federal NSR program requirements. 

In order to do that, however, the Air District needs to understand what exactly EPA believes the federal 

NSR program requires. Without a clear articulation of the applicable requirements, the Air District will 

not know with any certainty how it can revise its NSR rules in order to gain EPA approval. 
19

III. EPA’S STATEMENT THAT THE AIR DISTRICT’S RULES DO NOT SATISFY THE REQUIREMENTS 

IN 40 CFR SECTION 51.160 TO ENSURE COMPLIANCE WITH THE AIR DISTRICT’S 

CONTROL STRATEGY

In the same discussion of the requirements of 40 CFR Sections 51.160(a) and 51.160(b) 

addressed above in Section II, EPA also suggested that the Air District’s NSR rules do not satisfy the 

requirements to ensure that all new and modified sources will comply with all applicable requirements 

of the Air District’s control strategy. As EPA stated, “[i]n addition, the rule does not contain a 

prohibition on the issuance of an ATC if the project does not meet all applicable requirements of the 

control strategy, therefore the rule is deficient in this regard as well.” (TSD § 7.4.1, p. 127) EPA made a 

substantively identical statement in its Federal Register notice. (80 FR at p. 52239, col. 3.)

In subsequent discussions, EPA has stated that it has reviewed Air District Regulations 2-1-304

and 2-1-321, and that is now satisfied that these rules comply with 40 CFR Section 51.160. Regulation 2-

1-304 provides that the APCO will deny an Authority to Construct and Permit to Operate for a new or 

modified source that will not comply with any requirement of any District regulation (or other applicable 

regulatory requirement). Regulation 2-1-321 further provides that issuance of an NSR permit does not 

relieve the permit-holder from compliance with all applicable regulatory provisions. EPA acknowledged 

that these requirements ensure that all new and modified sources will comply with the Air District’s 

control strategy, stating that “[w]e agree that it appears the rules are not deficient as cited in the TSD 

based on the provision in Rule 2-1-304, as well as the provision in Rule 2-1-321.”

20

Comment III: District Regulations 2-1-304 and 2-1-321 Ensure That Any New Source Or 

Modification Will Comply With The Control Strategy

EPA should clarify in its Final Decision that the Air District’s NSR rules are not deficient with 

respect to this issue, for the reasons outlined above. The Air District appreciates that EPA has indicated 

that it has revised its position in informal communications, as noted above. It is important that the Final 

Decision correct the inaccurate statements in the Proposal, however, to ensure that the situation is clear 

for any future interested parties who may be reviewing the record provided in the Federal Register. 

IV. EPA’S PROPOSAL TO REQUIRE “DOUBLE-COUNTING” OF THE AMOUNT OF OFFSETS 

REQUIRED TO OFFSET A FACILITY’S MAXIMUM EMISSIONS UNDER THE WORST-CASE 

SCENARIO

EPA has proposed a limited disapproval of the Air District’s NSR rules with respect to the 

calculation procedures for the amount of offsets required under District Regulations 2-2-302 (offsets for 

 

20 Email from A. Lyons, EPA Region IX, to A. Crockett, BAAQMD (Aug. 31, 2015).
20

NOx and VOC) and 2-2-303 (offsets for SO2, PM2.5, and PM10). Specifically, EPA has proposed to 

disapprove the way the Air District calculates the amount of additional offsets that need to be provided 

where a source has already provided offsets for its maximum permitted emissions – i.e., its full potential 

to emit (PTE), or what EPA calls the source’s “allowable emissions.” (80 FR at 52241, col. 2-3; TSD § 

6.2.6, pp. 68-69, § 7.3.22, pp. 117-120, and p. 137, Deficiency Item #13.)

The Air District’s rules require that whenever a new source is built or an existing source is 

modified, the applicant must ensure that offsets have been provided for full amount of the source’s 

“cumulative increase.” The source’s “cumulative increase” is defined as its full PTE – i.e., its allowable 

emissions – less any “grandfathered” emissions that were being emitted before the offsets 

requirements came into effect, based on an actual emissions baseline at the time the source first came

into the offsets program. This mechanism ensures that all emissions increases from new and modified 

sources above a historical actual emissions baseline will be offset by corresponding actual emission 

reductions, which ensures that overall regional emissions from these sources do not increase in a 

manner that would jeopardize the Bay Area’s efforts to attain and maintain the NAAQS. By tying the 

offsets requirements to the full amount each source’s maximum allowable emissions, this “cumulative 

increase” approach ensures that all of a source’s emissions are offset, even under the worst-case, 

maximum emissions scenario. 

 The Air District’s regulations implement this system by calculating the cumulative increase as 

follows. When a new source is built, or the first time an existing source is modified after the offsets 

requirement comes into effect, the source must provide offsets for the difference between its actual 

emissions before construction and its full maximum PTE (i.e., its maximum allowable emissions) after 

construction. For new sources, this means the source’s full PTE. For modifications to existing sources,

this means the full PTE less the source’s grandfathered actual emissions. These calculations are 

provided in Section 2-2-606.1 and 2-2-606.3, and EPA indicated in its Proposal that it has no objection to 

these provisions. (TSD at p. 118.) 

For any subsequent modifications after offsets have been provided for the source’s full PTE 

under these provisions, additional offsets need to be provided only for any additional increases in PTE.21 

Once offsets have been provided for the source’s PTE, then even if the source operates at its maximum 

emissions rate, all of those emissions will be offset by the emission reduction credits already provided. 

The only way additional emission reductions could be necessary to offset the facility’s maximum 

allowable emissions would be if the PTE increased. The Air District’s regulations therefore define the 

source’s “cumulative increase” to include only additional increases in PTE in this scenario (i.e., only 

additional increases in allowable emissions). This calculation in provided in Section 2-2-606.2. 

 

21 EPA states in its proposal that this provision applies for “fully offset sources.” “Fully offset source” is a term that 

has a specific regulatory definition under Air District regulation 2-2-213, and it is not the terminology used in 

Section 2-2-606.2. To the contrary, Section 2-2-606.2 refers to sources for which “offsets have previously been 

provided.” EPA’s TSD indicates that EPA is using “fully offset” to have this meaning, and not the meaning specified 

in Section 2-2-213. (TSD at p. 118.)
21

EPA has proposed to find this calculation for modifications to sources for which offsets have 

already been provided as set forth in Section 2-2-606.2 to be deficient (at least with respect to federal 

major new sources and major modifications). EPA stated that the calculation of how many additional 

offsets are required in such a situation cannot be limited to increases in PTE. EPA stated that under 40 

CFR Section 51.165(a)(3)(ii)(J), the amount of additional offsets that need to be provided in a case where 

offsets have already been provided for the source’s full PTE must be the difference between the 

source’s actual emissions level before the modification and its PTE (“allowable emissions”) after the 

modification. (80 FR at p. 52241, col. 2-3; TSD § 7.3.22, pp. 117-120, § 11, p. 137.)

This interpretation is problematic because would require facilities to provide additional offsets 

even if they have already provided offsets for the full amount of their maximum possible emissions, 

based on the difference between their actual emissions before they implement a modification and their 

potential emissions after they implement the modification. Such an interpretation would require 

sources to provide far more offsets than they could ever actually emit, even under the worst-case 

scenario. 

An example helps illustrate this point. Take a “peaker” power plant that is used to address 

short-term “peaks” in electricity demand (e.g., on hot summer afternoons when air conditioning use is 

heavy). Such facilities are normally operated at less than their full annual maximum capacity. If such a 

peaker plant has maximum annual allowable emissions of 100 tons per year of a non-attainment 

pollutant, it would be required to provide 100 tons per year of offsets when it is first permitted (or 

more, if an offset ratio of greater than 1:1 is required). But as a peaker plant, its actual emissions may 

only be 10 tons per year when it is built and operated. If the facility undertakes a modification to 

change its equipment in a way that will not increase its overall capacity or its maximum annual 

emissions of 100 tons per year, EPA’s interpretation would require the facility to provide an additional 

90 tpy of offsets (the difference between its 10 tpy actual emissions rate at the time the modification is 

made and its 100 tpy maximum allowable emissions) – even though the facility has already provided 

offsets for the entire 100 tons that it could possibly emit in one year. The facility will have now provided 

190 tpy of offsets, even though it can never emit more than 100 tpy itself. Furthermore, if the facility 

makes additional modifications of this type in the future, it would be required to provide additional tons 

of offsets each time it does so, even if its PTE never increases above 100 tpy. The facility could therefore

end up being required to provide offsets in an amount many times the maximum amount of emissions it 

could legally emit. The Air District refers to this as “double-counting” the amount of offsets required, as 

sources could be required to offset their emissions two (or three or more) times over by providing two 

(or three or more) times as much actual emission reduction credits as the maximum amount of 

emissions they could ever possibly emit. 

The Air District disagrees with this interpretation of how the Clean Air Act requires States to 

implement the Act’s offsets requirements. The Air District submits the following specific comments on 

this issue. 
22

Comment IV.1: The Clean Air Act Only Authorizes EPA To Require Offsets Sufficient To 

Ensure “Reasonable Further Progress” – Which Does Not Allow EPA To Require The Air 

District To “Double-Count” The Amount Of Offsets Required

The Clean Air Act sets forth the statutory requirements governing the offsets provisions that 

must be included in State NSR permitting programs in Section 173(a)(1). Section 173(a)(1) states that

the permitting authority must obtain sufficient offsets from each source being permitted “such that 

total allowable emissions from existing sources in the region, from new or modified sources which are 

not major emitting facilities, and from the proposed source will be sufficiently less than total emissions 

from existing sources . . . so as to represent . . . reasonable further progress (as defined in [CAA Section 

171]).” “Reasonable further progress” is defined in Section 171(1) as such “annual incremental 

reductions in emissions . . . as are required by this part or may reasonably be required by the 

administrator for the purpose of ensuring attainment of the applicable national ambient air quality 

standard by the applicable date.” 

These provisions specifically delineate what the Clean Air Act requires for the offsets provisions 

in an NSR permitting program. The Act requires States to ensure that they obtain sufficient offsets from 

permitted sources subject to the offsets requirement as are necessary to ensure Reasonable Further 

Progress (RFP) towards attainment. The Act does not require States to do any more than this, and it 

does not authorize EPA to require States to do anything more than this. As the federal courts have 

made clear, the Clean Air Act “confines the EPA to the ministerial function of reviewing SIPs for 

consistency with the Act’s requirements. The EPA must approve the plan . . . if it meets the applicable 

requirements of the Act.” (Luminant Generation Co. LLC v. United States EPA, 714 F.3d 841, 846 (5

th Cir. 

2013) (citing CAA § 110(k).) “If the SIP revision meets the requirements in the Clean Air Act, the EPA 

must approve it.” (Alabama Envt’l Council v. United States EPA, 711 F.3d 1277, 1280 (11th Cir. 2013)

(citing CAA § 110(k)).) 

The Air District’s calculation methodology indisputably satisfies the Clean Air Act’s requirement 

to obtain sufficient offset to ensure that new and modified sources will not interfere with RFP, for 

several reasons. First of all, the ambient air quality throughout the Bay Area is in attainment of the 

NAAQS for all pollutants, even for the two standards where the region is still administratively classified 

as non-attainment (8-hour ozone standard and 24 hour PM2.5 standard).

22 By definition, therefore, the 

Bay Area does not need to obtain further “annual incremental reductions in emissions . . . for the 

purpose of ensuring attainment of the applicable national ambient air quality standard by the applicable 

date” (the definition of RFP under CAA Section 171). The Bay Area has already achieved sufficient 

reductions from the total regional emissions inventory to bring ambient concentrations back below the 

 

22 Determination of Attainment for the San Francisco Bay Area Nonattainment Area for the 2006 Fine Particle 

Standard; California; Determination Regarding Applicability of Clean Air Act Requirements, Final Rule, 78 FR 1760 

(Jan. 9, 2013); Determinations of Attainment by the Attainment Date, Extensions of the Attainment Date, and 

Reclassification of Several Areas Classified as Marginal for the 2008 Ozone National Ambient Air Quality Standards, 

Proposed Rule, 80 FR 51992, 51994 (Aug. 27, 2015). As explained in these documents, the ambient air quality in 

the Bay Area satisfies the NAAQS as a factual matter, even though the region has not yet been administratively redesignated to “attainment” as a matter of law. 
23

NAAQS, and no additional “annual incremental reductions in emissions” are necessary to ensure 

attainment. The Air District is still committed to requiring offsets from all sources that exceed the 

District’s offsets thresholds, for a number of reasons, and it will continue to do so. But EPA cannot claim 

that requiring more offsets than the Air District does under its current regulations is necessary to 

achieve RFP towards attainment of the NAAQS, where the ambient air quality in the Bay Area already

meets the NAAQS. The Clean Air Act does not require anything more with respect to the amount of 

offsets required. 

Furthermore, even if the Bay Area did have ambient concentrations exceeding the NAAQS, the 

Air District’s offset program ensures that the full amount of the allowable emissions from new or 

modified sources subject to the offsets requirements will in fact be fully offset by real, actual emission 

reductions from other sources, by at least a 1:1 ratio and in some cases by a ratio of more than 1:1. This 

requirement ensures that there will be no emissions from these sources that will add any incremental 

net increase to the region’s total emissions inventory. By ensuring that there will be no net increase 

from such sources, the Air District’s offsets program as written ensures that sufficient offsetting 

emission reductions are provided “so as to represent . . . reasonable further progress” as required by 

Section 173(a)(1). There is no need to do any more than this to ensure that RFP is met, and certainly no 

need to require more offsets from a source that it could ever actually emit.

EPA itself has recognized this reality in its own statements in the TSD. As EPA states:

[R]egarding the amount of offsets that are necessary to show noninterference with RFP, 

EPA presumes that so long as a new source obtains offsets in an amount equal to or 

greater than the amount specified in the applicable offset ratio (or, where the statute 

does not specify an offset ratio, in an amount equal or greater than 1:1), the new source 

will not interfere with RFP. Regulation 2, Rule 2 Sections 302 and 303 provide the ratios 

for federal offsets purposes, which are all equal to or greater than 1:1 for 

nonattainment pollutants. These offset ratio requirements ensure that the program for 

permitting of new or modified major sources will not interfere with RFP. These 

provisions satisfy the statutory requirement [of CAA Section 173(a)(1)(A)].

(TSD at p. 102 (emphasis added).) This is a correct statement of how the offsets requirement works 

under CAA Section 173(a)(1), and a correct conclusion about how the Air District’s offsets provisions 

satisfy the statutory requirement. If a new or modified source provides actual emission reductions that 

offset its maximum worst-case emissions at a 1:1 ratio or more, then the emissions from that source will 

not by definition be interfering with RFP. Implementing the offsets requirements in this manner 

therefore satisfies the Clean Air Act’s offsets requirements as specified in Section 173, and so EPA “must 

approve” the District’s program on this basis. (Luminant Generation, 714 F.3d at 846; Alabama Envt’l 

Council, 711 F.3d at 1280.)

Beyond the passage quoted in the previous paragraph, EPA does not address the applicable 

Clean Air Act authority for determining the amount of offsets that need to be required in its Proposal. 

Instead of discussing the provision in CAA Section 173(a)(1) specifying the amount of offsets that a State 

needs to require, EPA instead cites the provision in CAA Section 173(c)(1) that specifies the criteria for 
24

determining what emission reductions qualify for use in providing the offsets. Section 173(a)(1) is the 

provision that specifies the amount of “offsetting emissions reductions [that] have [to be] obtained 

. . . ,” whereas Section 173(c)(1) specifies how “[t]he owner or operator of a new or modified major 

stationary source may comply with any offset requirement in effect under this part . . . .” That is, 

Section 173(a)(1) specifies how to calculate the amount of offsets required – which is the calculation 

addressed in District Regulation 2-2-606.2 – whereas Section 173(c)(1) addresses a different issue, which 

is what emission reductions can be used to satisfy the requirement once the amount of offsets is 

established under Regulation 2-2-606.2 

EPA thus quotes the language in Section 173(c)(1) specifying that the permitting authority “shall 

assure that the total tonnage of increased emissions of the air pollutant from the new or modified 

source shall be offset by an equal or greater reduction, as applicable, in the actual emissions of such air 

pollutant . . . .” (TSD at p. 118 (emphasis added by EPA).) But this language does not support EPA’s 

position that sources have to provide more offsets than the maximum amount they could ever actually 

emit. It simply specifies that where offsets are required, the emission reductions provided need to 

reflect actual emissions that were being emitted into the atmosphere by other sources, but have now 

been removed through shutdown or curtailment of those other sources. Furthermore, by stressing that 

what matters under CAA Section 173 is what is actually being emitted (or not emitted) into the 

atmosphere, this language in fact supports the Air District’s interpretation that offsets need to be 

provided only for the full amount of the total emissions that a new or modified source could actually

emit under a worst-case scenario. As this provision makes clear, such emissions are to “be offset by an 

equal or greater reduction” in actual emissions from other sources – not a reduction that is two or three 

or more times the maximum amount that the source could actually emit.

For all of these reasons, the Air District’s offset calculations provision in Section 2-2-606.2 

satisfies the requirements of CAA Section 173(a)(1) to require sufficient offsets to ensure that RFP is 

achieved. As EPA has concluded, the Air District’s offsets requirements “ensure that [its] program for 

permitting of new or modified major sources will not interfere with RFP [and therefore] satisfy[ies] the 

statutory requirement” under the CAA offsets provision in Section 173(a)(1). (TSD at p. 102.) EPA 

should therefore approve this provision under CAA Section 110(k)(3) as meeting the Clean Air Act’s 

requirements. CAA Section 173(a)(1) does not authorize EPA to require the Air District to obtain more

offsets than necessary to ensure that RFP is achieved. Disapproving Section 2-2-606.2 because it does 

not require such additional offsets would be arbitrary and capricious and would violate Section 

110(k)(3). 

Comment IV.2: District Regulation 2-2-606.2 Is Consistent With 40 CFR Section 

51.165(a)(3)(ii)(J) Under Any Reasonable Interpretation Of That Regulatory Provision

In addition to the statutory limitations on EPA disapproving the Air District’s NSR rules on this 

issue as discussed above, the Air District also submits that EPA is incorrect in its interpretation of 40 CFR 

Section 51.165(a)(3)(ii)(J). The only reasonable interpretation of that regulation is that it requires offsets 

for a source’s maximum potential emissions less any historical actual emissions baseline, consistent with 
25

CAA Section 173(a)(1) as discussed above. The Air District submits that EPA should apply such an 

interpretation, and not the interpretation stated in EPA’s proposed limited disapproval on this issue.

EPA is of course prohibited from applying anything in 40 CFR Section 51.165(a)(3)(ii)(J) to the 

extent that it is contrary to the requirements of the Clean Air Act. An agency’s regulations can never be 

applied to contravene the provisions of the governing statute. (Touche Ross & Co. v. Redington, 442 U.S. 

560, 577 n.18 (1979) (“[T]he language of the statute and not the rules must control.”).) And as outlined 

above, the Clean Air Act does not provide EPA with any authority to require the Air District to require 

more offsets that are actually necessary to ensure that RFP is met. EPA should approve the Air District’s 

offsets calculation methodology in the first instance under the express language of CAA Section 

173(a)(1), as discussed in the previous comment. But even without this statutory basis, EPA should also

approve the Air District’s methodology based on the only reasonable interpretation of 40 CFR Section 

51.165(a)(3)(ii)(J). That section should not be interpreted to require double-counting of the amount of 

offsets that are required from modified sources, any more than CAA Section 173(a)(1) does. 

There are multiple reasons why EPA should not interpret 40 CFR Section 51.165(a)(3)(ii)(J) to 

require “double-counting” of the amount of offsets required when a source is modified. The following 

discussion addresses each one in turn. 

First, the plain language of Section 51.165(a)(3)(ii)(J) supports the Air District’s position on how 

this provision should be interpreted. 

The regulation states that the amount of offsets must be based on the difference between the 

source’s future “allowable emissions” (i.e., its potential to emit) and its “actual emissions” baseline “as 

defined in paragraph (a)(1)(xii) of this section” (emphasis added). Paragraph (a)(1)(xii) explicitly states 

that “[t]he reviewing authority may presume that source-specific allowable emissions for the unit are 

equivalent to the actual emission emissions of the unit.” (40 CFR § 51.165(a)(1)(xii)(C).) These

regulatory provisions unambiguously allow permitting authorities to look only at increases in the 

preexisting PTE – i.e., the difference between future “allowable emissions” and past “allowable 

emissions,” which can be presumed to be equivalent to past “actual emissions” under paragraph 

(a)(1)(xii) – when determining the amount of additional offsets that are required in connection with a 

modification. 

This language provides EPA with a clear and direct way to adopt the more reasonable 

interpretation of Section 51.165(a)(3)(ii)(J). EPA’s own regulations specifically authorize the use of the 

source’s fully offset PTE as its baseline “actual emissions” in appropriate circumstances, which is exactly 

what the Air District’s calculation methodology does. 

Furthermore, even if the Air District were not explicitly allowed to presume that a source’s 

actual emissions and its PTE are equivalent for purposes of applying Section 51.165(a)(3)(ii)(J), the 

District’s approach to calculating offsets would still satisfy the plain language of the regulation. The Air 

District’s regulations require that a source’s full “cumulative increase” must be offset, which is

calculated is based on the difference between (i) the source’s allowable emissions (PTE) after the 

modification is implemented and (ii) its actual emissions baseline based on its past operations before 
26

the source came into the offsets program. This actual emissions baseline used in determining the 

amount of the “cumulative increase” falls squarely within the regulatory language requiring the use of 

the “actual emissions before the modification.” There is nothing in the regulatory language that 

specifies exactly when “before the modification” the emissions must be measured, and there is nothing 

that prevents the use of the source’s actual emissions at the point when it first became subject to the 

offsets requirements as its baseline “actual emissions.” Indeed, given the way that the offsets 

requirements work, that is the only reasonable way to calculate the baseline “actual emissions” for 

purposes of Section 51.165(a)(3)(ii)(J), because any other approach leads to a highly problematic and 

statutorily impermissible “double counting” requirement.

Simply put, the Air District’s calculation methodology does use the source’s “actual emissions 

before the modification” as the basis for determining the amount of offsets required for a modification. 

It uses the source’s actual emissions at the time it first came into the offsets program, which establish 

the actual emissions baseline that determine the source’s “cumulative increase” for all future permitting 

going forward. Every time the source is modified from that point forward, the applicant must ensure 

that offsets have been provided for the full “cumulative increase” going back to this actual emissions 

baseline. This approach easily fits within the regulatory language in Section 51.165(a)(3)(ii)(J) requiring 

the use of the “actual emissions before the modification,” even without the overlay of Section 

51.165(a)(1)(xii)(C)’s explicit language that a permitting agency can use the source’s “allowable 

emission” for this purpose in appropriate situations. This approach is certainly not an unreasonable 

interpretation of the regulatory language Section 51.165(a)(3)(ii)(J), and given all of the other 

circumstances surrounding how the offsets requirements are supposed to work under CAA Section 173, 

the Air District submits that this is the only reasonable interpretation. 

A final observation on the interpretation of this regulatory language: It appears that EPA’s 

reluctance to adopt the more reasonable interpretation urged by the Air District comes down to the 

language of the regulation and a belief that EPA’s hands are tied because that language compels it to 

require a “double-counting” approach. EPA has certainly never suggested any compelling policy reason 

why requiring more offsets than the total amount of emissions a source could potentially emit under 

worst-case conditions is necessary to demonstrate RFP or to ensure that the NAAQS are maintained and 

attained. To the contrary, in discussions on this issue EPA has always simply pointed to the regulatory 

language as the basis for why it feels that it has no alternative but to disapprove the Air District’s 

program on this issue. But as the previous paragraphs make clear, that is absolutely not the case. There 

are several compelling reasons why EPA can and should conclude that the language in subsection 

(a)(3)(ii)(J) does not require double-counting of the amount of offsets required. At the very least, this 

language gives EPA sufficient interpretive leeway to adopt the Air District’s interpretation, which is the 

only reasonable interpretation for all of the additional reasons outlined below.

Second, the Air District’s more reasonable interpretation is compelled by the statutory provision 

the regulation was adopted to implement. As explained in detail above, CAA Section 173 requires a 

permitting authority to require offsets in an amount sufficient to ensure that RFP is achieved. Section 

51.165(a)(3)(ii)(J) must be interpreted to give effect to this statutory mandate. The Air District’s 

interpretation is the only interpretation that does so. EPA’s interpretation would require many more 
27

offsets than are necessary to ensure that RFP is maintained, and so it cannot be the correct one. To the 

extent that EPA intended this regulation to be applied in such a manner, the regulation would be void 

and unenforceable. (See Touche Ross, 442 U.S. at 577, n.18.)

Third, the regulatory history behind Section 51.165(a)(3)(ii)(J) shows that EPA never intended

that provision to be applied as EPA has interpreted it in this Proposal. In fact, the regulatory history 

supports the Air District’s interpretation. 

Subsection (a)(3)(ii)(J) was added to Section 51.165 as part of EPA’s “NSR Reform” regulations in 

2002, in which EPA revised the way in which emissions increases are measured for purposes of 

determining whether NSR requirements are triggered.23 EPA adopted a new approach for NSR 

applicability that uses an “actual-to-projected-actual” calculation to determine whether there is a 

“significant” net emissions increase that triggers major NSR requirements. An issue arose as to whether 

this actual-to-projected-actual methodology would apply to substantive NSR requirements such as 

offsets, in addition to being used in the threshold applicability determination. This was an important 

issue for the offsets requirements, because applying the new NSR reform methodology there would 

mean that a source would not necessarily have to offset its full PTE. Using the NSR reform methodology 

would require the source to offset only its future projected actual emissions, not its maximum permitted 

emissions (which is what the Air District’s regulations require).

Subsection (a)(3)(ii)(J) was adopted to answer this question, and to make clear that the rule 

continues to be that the full PTE must be offset, not just projected actual emissions. EPA addressed this 

point in the Federal Register notice supporting the NSR Reform rule in a discussion headlined “Am I Able 

To Apply Today’s Changes for Calculating The Baseline Actual Emissions to Other Major NSR 

Requirements?” EPA answered that question by explaining that “any determination of the amount of 

emissions offset that must be obtained by a major modification subject to the nonattainment NSR 

requirements under § 51.165(a) should be based on calculations using the existing definitions of ‘actual 

emissions’ and ‘allowable emissions.’ See new § 51.165(a)(3)(ii)(H) [sic].”

24

 

This context shows that Subsection (a)(3)(ii)(J) was adopted simply to make clear that the 

source’s full PTE must be offset, and not just its projected actual emissions. There is nothing to suggest 

that it was intended to require additional offsets over and above the source’s full PTE. And that 

obviously could not have been EPA’s intent, as that would be inconsistent with the statutory mandate in 

CAA Section 173, as discussed above. 

Furthermore, this regulatory history is fully consistent with interpreting the “actual emissions 

before the modification” as being the source’s baseline actual emissions before it came into the offsets 

 

23 See Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NSR): Baseline

Emissions Determination, Actual-to-Future-Actual Methodology, Plantwide Applicability Limitations, Clean Units, 

Pollution Control Projects, Final Rule, 67 FR 80186, 80196 col. 1-2 (Dec. 31, 2002). 

24 Ibid.; see also generally discussions in Sections II.A. and II.C.8. in that document. Note also that this reference to 

Subsection “(a)(3)(ii)(H)” in EPA’s Federal Register notice was incorrect. This provision is actually codified in 

Subsection (a)(3)(ii)(J). 
28

program, which is how the Air District’s “cumulative increase” calculations work. There is nothing in this 

regulatory history to suggest that such an interpretation is inconsistent with how EPA intended 

Subsection (a)(3)(ii)(J) to be applied. 

Fourth, the Air District’s interpretation is supported by EPA’s own rules governing the amount of 

offsets EPA requires when it does federal Non-Attainment NSR permitting. In general, where EPA 

implements Non-Attainment NSR permitting (for example, in the interim period between a nonattainment designation and the State’s adoption of its own SIP-approved non-attainment NSR program), 

EPA does so under 40 CFR Part 51, Appendix S. And the offsets requirement in Appendix S does not 

require double-counting of the amount of offsets required. 

The federal offsets requirement is in Section IV.A. of Appendix S, Condition 3, and it simply 

provides that offsets “are required such that there will be reasonable further progress towards 

attainment of the NAAQS.” There is no provision requiring additional offsets beyond what is necessary 

to ensure that RFP is achieved, and certainly no provision requiring double-counting of the amount of 

offsets needed to ensure that a source’s maximum emissions under the worst-case scenario are offset. 

EPA should interpret Subsection (a)(3)(ii)(J) in the context of this other EPA regulation addressing the 

same issue. 

Similarly, EPA has also adopted a specific Federal Implementation Plan (“FIP”) for the Tri-Cities 

Landfill in the Salt River Pima-Maricopa Indian Community that uses the same rule. As that EPA rule 

states:

By the time the project is to commence operation, the owner or operator of the project 

must have obtained sufficient reductions in actual emissions from existing facilities 

within the same nonattainment area which satisfy the requirements of section 173 of 

the Clean Air Act to offset the potential to emit of the project.

25

EPA explicitly does not require offsets beyond what is required by CAA Section 173. Consistent with 

Section 173, all that is required are sufficient offsets to offset the project’s potential to emit – and no 

more. 

The most reasonable interpretation of Subsection (a)(3)(ii)(J) is that it has to be read 

consistently with these regulations that EPA itself uses to implement the NSR program federally. It 

would be unreasonable to read Subsection (a)(3)(ii)(J) to apply a different rule to state permitting 

programs than EPA follows under its federal program. And it would be arbitrary and capricious to 

disapprove the Air District’s rule where EPA has concluded that a similar approach satisfied the federal 

NSR requirements for purposes of its own NSR program. 

Fifth, the Air District’s interpretation is supported by the relevant policy considerations

underlying the offsets requirements. The purpose of the offsets requirements is to ensure that growth 

from new major sources and major modifications does not increase emissions in the region in such a 

 

25 Federal implementation plan for Tri-Cities landfill, Salt River Pima-Maricopa Indian Community, 40 CFR

§ 49.22(d)(1)(i).
29

manner as to undermine all of the region’s other efforts to reduce emissions and bring air quality back 

below the NAAQS. Providing offsetting emission reductions for the maximum amount that a source 

could possibly emit achieves that purpose. There is no reason why additional emission reductions need 

to be obtained to offset the same emissions over and over again, which is what EPA’s interpretation 

would require. 

EPA even conceded during the rule development process for the Air District’s 2012 NSR Rule 

amendments that the Air District’s interpretation was an “appropriate and reasonable” approach to 

requiring offsets, although EPA commented that the District should only allow previously-provided 

offsets to be relied on for a period of 5 years.

26

 EPA’s comment was that after 5 years, a source should 

have to provide offsets again for the same PTE that had been previously offset. There is, of course, no 

such 5-year limit applicable under CAA Section 173 or 40 CFR Section 51.165, and EPA has subsequently 

abandoned its position that any such time limit should be required. But EPA was correct in its 

recognition that allowing sources to offset their PTE once, and then rely to on those previously-provided 

offsets for future permitting for their existing PTE, was appropriate and reasonable. This observation 

further supports the Air District’s interpretation. Certainly, EPA has not provided any policy reasons why 

the interpretation stated in the Proposal is reasonable.

Sixth, EPA’s interpretation is inconsistent with how EPA has interpreted the offsets 

requirements with respect to California air districts in the past. The Bay Area Air District’s rules have 

always calculated offsets this way, and EPA has had no problem approving them in the past. Moreover, 

most if not all of the other air districts in California calculate their offsets requirements the same way, 

and EPA has approved their NSR rules as well. 

EPA discusses two of these other air districts (the San Joaquin Valley and Sacramento districts)

in its TSD for the current Proposal. But both of those districts have rules similar to the Bay Area Air 

District’s that do not require additional offsets in cases where a source’s PTE has already been offset. 

With respect to the Sacramento district, EPA stated that “most” of the sources permitted under 

that district’s rules would have to provide offsets consistent with EPA’s interpretation. (TSD § 7.3.22, 

p. 120.) But “most” is not “all.” This point concedes the Sacramento district’s rules use the same 

approach as the Bay Area Air District’s rules in at least some cases. Moreover, it shows that EPA still 

found it appropriate to approve that district’s rules knowing that they would use an approach like the 

Bay Area Air District uses here in at least some cases – and that EPA concluded that those situations 

were approvable as consistent with the federal NSR program requirements. The Air District submits that 

EPA should reach the same conclusion here with respect to its program, for the same reasons that EPA

concluded that it could approve the situations arising under the Sacramento district’s NSR program 

where a similar rule is used. 

With respect to the San Joaquin Valley district, EPA correctly points out that it stated in its 

approval documents that approval was conditioned on the district making an “equivalency 

 

26 EPA Region 9 Comments on the DRAFT Revisions to BAAQMD Regulation 2, Rules 1 & 2, Attachment to Letter 

from G. Rios, EPA, to C. Lee, BAAQMD (July 26, 2012). 
30

determination” to show that it is obtaining more offsets from non-major sources than EPA would 

require from major sources under its “double-counting” interpretation. But it is not clear whether EPA’s 

interpretation in this approval document is consistent with how EPA has been interpreting the offsets 

requirements throughout the rest of California and the nation, or whether it is an outlier representing a 

new and inconsistent policy direction. 

Furthermore, there are other California air districts for which EPA has recently approved NSR 

rules that allow major sources to be permitted without requiring “double counting” of offsets in at least 

some cases. For example, after the Air District submitted its current rules to EPA for review in 2013, EPA 

approved the NSR rules for the Placer County and Feather River districts, both of which allow the use of 

a PTE baseline for determining the amount of additional offsets required when a source undergoes a 

major modification in certain situations.27 EPA does not address these recent examples in its TSD for the 

current Proposal, but they cast serious doubt on EPA’s assertions that it has consistently interpreted the 

federal NSR program to require “double counting” in other areas of California.

The Air District submits that if EPA wants to base a Final Decision on an explanation that its 

interpretation is consistent with how it has interpreted the offsets requirement in the past, it should 

undertake a comprehensive review of all of the NSR rule approvals it has promulgated – as well as any 

federal Major Non-Attainment NSR permits it has issued under Appendix S – to provide a full picture of 

exactly how EPA has applied this requirement in other situations. Based on information available to the 

Air District, it appears that the vast majority – if not all – of the NSR programs that EPA has approved use 

approaches similar to the one the Air District has adopted here. The two examples cited in EPA’s TSD 

are not sufficient to provide a complete picture of how EPA has addressed this issue in the past.

* * * * *

For all of these reasons, EPA should approve Section 2-2-606.2 as being consistent with 40 CFR 

Section 165(a)(3)(ii)(J), as a further reason for approval in addition to the fact that it satisfies CAA 

Section 173(a)(1). The Air District’s rule satisfies Section 165(a)(3)(ii)(J) under the most reasonable 

interpretation of that provision. EPA’s proposed interpretation to the contrary is not a reasonable 

reading of the regulatory language, and EPA is not required to adopt such an interpretation. 

Furthermore, even if EPA’s interpretation of Section 165(a)(3)(ii)(J) were the only possible way to read 

the regulation, then EPA would be prohibited from applying it in a situation like this because it is 

contrary to the statutory requirements in Section 173(a)(1). 

 

27 See, e.g., Placer County Rule 502, Section 227.2 (sources do not have to provided additional offsets based on an 

actual-to-potential calculation where (i) offsets have been provided for the source’s PTE within the past 5 years 

and/or (ii) where baseline actual emissions are at least 80% of the source’s PTE); and Feather River Rule 10.1, 

§ F.2.b. (sources do not have to provide additional offsets based on an actual-to-potential calculation where 

baseline actual emissions are at least 80% of the source’s PTE). EPA had no problem approving these rules in 2013, 

while it was developing the current Proposal, even though they allow major modifications to be permitted without 

requiring offsets based on an actual-to-potential calculation. See Revision of Air Quality Implementation Plan; 

California; Placer County Air Pollution Control District and Feather River Air Pollution Control District; Stationary 

Source Permits, Final Rule, 78 FR 58460 (Sept. 24, 2013). 
31

V. THE CLEAN AIR ACT’S GENERAL REQUIREMENT TO ENSURE THAT OFFSETS ARE OBTAINED 

SUFFICIENT TO ENSURE “REASONABLE FURTHER PROGRESS”

As explained in detail in the previous section, Clean Air Act Section 173(a)(1) specifies that local 

permitting authorities need to require offsets only in an amount necessary to ensure that RFP is 

achieved. This principle applies generally to all aspects the offsets requirements, not just to the 

procedures for calculating the amount of additional offsets necessary when a source is modified 

specifically addressed in the discussion in Section IV above. 

Comment V.1: Clean Air Act Section 173(a)(1) Requires Local Permitting Authorities To 

Obtain Offsets Sufficient To Achieve RFP – And Not More 

EPA should clarify generally that with respect to all of the offsets requirements in the federal 

NSR regulations, local permitting authorities must implement these requirements in order to ensure 

that RFP is maintained. This is what the Clean Air Act requires under Section 173, as EPA has itself 

recognized.28 Furthermore, this is what EPA requires in its own Non-Attainment NSR permitting 

regulations that it implements when it is the permitting authority under 40 CFR Part 51, Appendix S.29 

Requiring local permitting authorities to implement their offsets provisions in a manner that goes 

beyond this mandate is not contemplated or authorized under the Clean Air Act. EPA should clarify that 

this principle is inherent in all of its approval/disapproval determinations in its Final Decision on the Air 

District’s NSR rules. EPA should further clarify that any revised Air District submittal will not be required 

to implement any offsets requirements beyond what is required to achieve RFP. 

Comment V.2: EPA Should Confirm That The Air District Can Satisfy The Clean Air Act’s

Offsets Requirements By Incorporating By Reference EPA’s Own Offsets Rule In EPA’s 

Federal NSR Program In 40 CFR Part 51, Appendix S 

To the extent that EPA finds any aspect of the Air District’s offsets requirements deficient with 

respect to satisfying the federal NSR program’s requirements, EPA should clarify that the Air District can 

address any such deficiencies by incorporating EPA’s own offsets requirement in Appendix S by 

reference. Incorporating elements of EPA’s own regulations that EPA uses to implement the Clean Air 

Act’s NSR requirements when it does permitting at the federal level is an appropriate method for state 

agencies to implement their own NSR programs at the state level, and EPA has repeatedly approved SIP

 

28 See Requirements for Implementation Plans; Air Quality New Source Review, Final Rule, 54 FR 27286, § II.D.4.

(June 28, 1989) (“[T]he essence of the offset program is to ensure that additional emissions from a new source will 

be offset by corresponding reductions elsewhere so as to result in RFP toward attainment.”).

29 See 40 CFR Part 51, Appendix S, § IV.A., Condition 3 (“Emission reductions (offsets) from existing sources in the 

area of the proposed source (whether or not under the same ownership) are required such that there will be 

reasonable further progress toward attainment of the applicable NAAQS.” (footnotes omitted; emphasis in 

original)). 
32

rules utilizing this approach.

30 EPA should confirm that the Air District can use the same approach for 

satisfying the federal NSR program’s offsets requirements – i.e., by incorporating by reference the 

requirement in Condition 3 of Section IV.A. of Appendix S, which provides that offsets must be provided 

“such that there will be reasonable further progress toward attainment of the applicable NAAQS.”

VI. EPA’S STATEMENT THAT OFFSETS REQUIREMENTS APPLY TO SO2 AS A PM2.5

PRECURSOR

With respect to EPA’s proposed limited disapproval of the Bay Area’s NSR rules for failure to 

satisfy the NSR offsets requirements, EPA indicated that it believes that these requirements apply to SO2

as a PM2.5 precursor. As EPA stated, “offsets must be addressed for PM2.5 and the PM2.5 precursors (NOx 

and SO2) . . . .” (80 FR at p. 52241, col. 3; TSD at p. 65). The Air District has the following comments on 

this issue.

Comment VI: Non-Attainment NSR Requirements Do Not Apply To SO2 Because SO2

Emissions “Do Not Contribute Significantly to PM2.5 Levels Which Exceed The [NAAQS]” 

EPA cannot require the Bay Area to include offsets provisions for SO2 under the federal NonAttainment NSR program. The Bay Area is not designated as non-attainment for SO2, and so the offsets 

requirements do not apply to SO2 directly as a non-attainment pollutant. The only way that SO2 can be 

subject to any Non-Attainment NSR requirements such as offsets is through CAA Section 189(e), which 

requires that PM2.5 precursors be subject to the same Non-Attainment NSR requirements as directlyemitted PM2.5.

31

 But Section 189(e) states explicitly that this requirement does not apply to sources of 

precursors “that do not contribute significantly to [PM2.5] levels which exceed the standard in the area.” 

(CAA § 189(e), 42 USC § 7513a(e).) And SO2 emissions in the Bay Area by definition cannot contribute 

significantly to any PM2.5 levels exceeding the PM2.5 NAAQS, because there are no areas anywhere 

within the region with levels exceeding the PM2.5 NAAQS. 

EPA itself agrees with this analysis, as EPA explained in the TSD. Specifically, EPA stated: 

In 2013 EPA designated the BAAQMD as an attainment area for the annual PM2.5

NAAQS, and in 2013 determined through the issuance of a clean data determination 

that the region’s PM2.5 levels do not currently exceed the 24-hour PM2.5 standard. 

Because the Bay Area is currently meeting the PM2.5 NAAQS, it follows that there are no 

sources of PM2.5 precursors that currently contribute significantly to any PM2.5 levels 

that exceed the standards in the area.

 

30 The incorporation-by-reference of EPA’s federal PSD requirements in 40 CFR Section 52.21, which EPA has 

recently approved for many California air districts, is a good example of this approach.

31 EPA provides a more detailed explanation of how Section 189(e) applies to PM2.5 precursors in Section 7.3.28 of 

the TSD (pp. 122-23), including an explanation of the D.C Circuit’s opinion interpreting that section in Natural 

Resources Defense Council v. EPA, 706 F.3d 428 (D.C. Cir. 2013). 
33

(TSD § 7.3.28, p. 125 (citing 78 FR 1760 (Jan. 9, 2013).) 

The Air District does appreciate that EPA’s analysis quoted above was specifically addressed at 

one particular precursor, ammonia, and that EPA also looked to other reasons specific to that particular 

precursor that EPA cited as additional support for the conclusion that ammonia cannot be making a 

significant contribution to any PM2.5 levels that exceed the NAAQS in the Bay Area. But EPA’s analysis in 

the quoted passage, standing alone, is sufficient to support the same conclusion for all PM2.5 precursors

– not just ammonia. As EPA correctly noted, if there are no PM2.5 levels that currently exceed the 

NAAQS, then by definition there can be no sources of any PM2.5 precursors that contribute significant to 

any PM2.5 levels that exceed the NAAQS. This conclusion is just as true for NOx and SO2 as it is for 

ammonia. There is nothing about EPA’s statement in this regard that is specific to ammonia.

EPA should therefore make clear that any additional offsets requirements that the Bay Area’s 

NSR rules may need in order to satisfy the federal NSR program apply to directly-emitted PM2.5 only, and 

not to SO2 as a PM2.5 precursor.

32

 There is no way that EPA can find that there are any major sources of 

SO2 that can contribute significantly to any PM2.5 levels in excess of the PM2.5 standard in the Bay Area, 

where it has determined that there are in fact no PM2.5 levels in the Bay Area that exceed the standard. 

It would be arbitrary and capricious to reach such a conclusion, where EPA has concluded that 

“[b]ecause the Bay Area is currently meeting the PM2.5 NAAQS, it follows that there are no sources of 

PM2.5 precursors that currently contribute significantly to any PM2.5 levels that exceed the standards in 

the area.” 

EPA should also make clear that this same conclusion applies to NOx as a PM2.5 precursor. For 

the same reasons as SO2, EPA cannot require that the Air District to regulate NOx under the federal NonAttainment NSR program as a PM2.5 precursor. This conclusion makes less of a substantive difference in 

how NOx is regulated, as NOx is regulated independently as an ozone precursor regardless of its status 

as a PM2.5 precursor. But EPA should nevertheless make clear that NOx is regulated only as a ozone 

precursor, and is not subject to Section 189(e) for the reasons outlined above, in order that the EPA’s 

legal basis for its final decision is clear and based on a correct legal foundation. 

VII. PROVIDING EMISSION REDUCTION CREDITS FOR SHUTDOWNS OF FULLY OFFSET SOURCES

For “fully offset” sources, the Air District’s NSR rules provide that a source can claim Emission 

Reduction Credits (ERCs) when it is shut down or curtailed based on the full amount of its pre-shutdown 

 

32 EPA has made clear that precursors that satisfy Section 189(e)’s requirements for exclusion from regulation “can 

be excluded from control requirements for major sources including NNSR permitting.” (See generally Fine 

Particulate Matter National Ambient Air Quality Standards: State Implementation Plan Requirements, Proposed 

Rule, 80 FR 15340, 15353-54 (March 23, 2015) (emphasis added).) EPA’s TSD for the current Proposal correctly 

reflects this position, explaining that SO2 (and other precursors) must be included in the Non-Attainment NSR 

requirements “except where the Administrator determines that emissions of these pollutants emitted from major 

sources do not contribute significantly to PM2.5 levels that exceed the PM2.5 ambient standards in the area.” 

(TSD § 7.3.28, p. 122.)
34

PTE. This provision is in the baseline emissions calculation provisions in District Regulation 2-2-605, 

which provide that the baseline used for calculating the amount of ERCs generated by the shutdown or 

curtailment of a fully offset source is the source’s pre-shutdown potential to emit.33 A “fully offset” 

source is defined as a source for which offsets have been provided for the full amount of the source’s 

maximum permitted emissions (i.e., its PTE).34 

In a nutshell, this rule allows a facility that provides ERCs for the full amount of a source’s PTE 

when the source is built to get all of those ERCs back when the source is subsequently shut down. Such 

a rule is appropriate from an air quality perspective because it returns the situation to where it was 

before the source was ever built: there are no longer any emissions from the source, which was the 

situation before it was built; and the ERCs that were provided go back to the facility, which was the 

situation before the source was built. Allowing the facility to recover the full amount of the ERCs that 

were provided when the source was first constructed restores the status quo in the same manner as if 

the source had never been constructed in the first place.35

The Air District has followed the same substantive approach for many years in determining the 

amount of ERCs available from shutting down a source for which offsets have been provided, and it is 

incorporated into the most recent version of the District’s NSR rules that EPA has approved into the SIP. 

Specifically, the 1994 version of the Air District’s rules that EPA approved in 1999 utilizes this approach 

in Section 2-2-605, which allows for the use of “the annual emission rate for which offsets have been 

provided” – i.e., the source’s fully offset permitted emissions – as the baseline for determining the 

amount of ERCs available.36 

EPA has now objected to this approach on the basis that it uses maximum permitted emissions

(PTE) as the baseline for calculating the amount of ERCs available from a fully offset source, instead of 

using an actual emissions baseline. EPA points to the provision in 40 CFR Section 51.165(a)(3) specifying 

the circumstances under which PTE can be used as the baseline for calculating ERCs and the 

circumstances under which actual emissions must be used as the baseline. EPA claims that Section 

51.165(a)(3) requires the Air District to use actual emissions as the baseline for all ERC calculations, 

 

33 This provision is in Section 2-2-605.2(i) of the December 2012 NSR rules that are the subject of EPA’s Proposal. 

The pre-December-2012 version contains a substantively identical provision in Section 2-2-605.4. 

34 The “fully offset” source definition is in Section 2-2-213 of the December 2012 NSR rules. The pre-December2012 version contains a substantively identical provision in Section 2-2-245.

35 This situation applies only in the case of fully offset sources, and the Air District’s ERC calculation rules allow the 

PTE baseline to be used only for fully offset sources. In situations where offsets have not been provided for the 

source’s full PTE, the Air District’s rules require the use of an actual emissions baseline.

36 Subsection 2-2-605.1 in the 1994 version provides the procedure for a shutdown of a source, and subsection 2-2-

605.2 provides the procedure for controlling or curtailing emissions from a source using identical language. EPA 

approved the 1994 version of Regulation 2-2 on January 26, 1999. (See Final Approval and Promulgation of 

Implementation Plans; California State Implementation Plan Revision, Bay Area Air Quality Management District, 

Final Rule, 64 FR 3850 (Jan. 26, 1999).)
35

including calculations for fully offset sources. EPA is proposing a limited disapproval based on this issue. 

(80 FR at p. 52241, col. 2; TSD at pp. 113-14.37) 

Comment VII: EPA Should Approve The Air District’s Rule For Establishing The Baseline 

For Determining The Amount Of ERCs Generated From Fully Offset Sources, Which EPA 

Has Approved In The Past And Which Is Authorized Under EPA’s NSR Regulations

The Air District disagrees that allowing the use of a PTE baseline for fully offset sources is not 

approvable under EPA’s federal NSR regulations. The Air District submits that EPA should approve the 

Air District’s approach for calculating the amount of ERCs available when a fully offset is shut down or 

curtailed, for the following reasons. 

EPA should approve the Air District’s provision allowing fully offset sources to use a PTE baseline 

for the same reasons that EPA approved the District’s earlier version of this same provision in 1999. As 

explained above, the prior 1994 version of the District’s ERC calculation baseline provision used the 

same approach, and EPA approved it as satisfying the requirements of 40 CFR Section 51.165(a)(3). The 

Air District has continued to follow this approach since that time, relying on EPA’s approval that this 

approach satisfies the applicable federal NSR requirements, and it developed the current version of 

Section 2-2-605 accordingly. EPA has not provided any explanation as to why this approach is no longer 

consistent with the requirements of the federal NSR program, where EPA has never had any problem 

approving it historically. EPA should find the Air District’s approach approvable in 2015 for the same 

reasons that EPA has found it to be approvable in the past. 

Furthermore, turning to EPA’s NSR regulation governing this issue in 40 CFR Section 

51.165(a)(3), the language of that regulation explicitly authorizes the Air District to use permitted 

emissions as the baseline for determining the amount of ERCs available for fully offset sources in the Bay 

Area. Section 51.165(a)(3) provides that the default requirement for setting the baseline for calculating 

ERCs is to use the source’s PTE.38 That section clearly states that an actual emissions baseline is required 

 

37 EPA also references this issue in Section 7.3.22 of the TSD (at p. 120) in connection with the provision in District 

Regulation 2-2-607.2 specifying how contemporaneous onsite ERCs can be used in satisfying the applicable offsets 

requirements for permitting new and modified sources. District Regulation 2-2-607.2 implicates this issue because 

it specifies that the amount of contemporaneous onsite ERCs available for use is determined by the ERC calculation 

provisions in District Regulation 2-2-605. The Air District directs this comment to EPA’s assertions in Section 7.3.22 

of the TSD as well as to its assertions in Section 7.3.13 of the TSD directed specifically to District Regulation 2-2-

605.

38 Technically speaking, the default rule is to use the lower of either (i) the emissions limitation in effect under the 

applicable SIP in effect at the time of the permit application or (ii) the source’s potential to emit. This two-part test 

arises from 40 CFR Section 51.165(a)(3)(i), which says to use the applicable SIP limitation (unless one of the 

exceptions in subparagraphs (A) and (B) applies), and 40 CFR Section 51.165(a)(3)(ii)(A), which says to use the 

source’s PTE if it is lower than the applicable SIP limitation. But the practical effect of this two-part test is simply to 

provide that the source’s PTE should be used as the default rule. This is because a limitation on the capacity of the 

source to emit an air pollutant is incorporated into the source’s PTE where the limitation is federally enforceable 

(40 CFR Section 51.165(a)(1)(iii)), and all emissions limitations in the SIP are by definition federally enforceable. 

Put another way, a SIP limitation creates a legal limit on the source’s potential emissions and therefore defines its 
36

only in two specific circumstances: (i) where the demonstration of reasonable further progress (RFP) and 

attainment is based upon the actual emissions of sources in the area;39 and (ii) where there is no 

emissions limitation in the SIP for a particular source or source category.40 Neither of those 

circumstances applies to the Bay Area’s NSR program, and so the default rule applies instead – that is, 

the amount of ERCs available may be based on the source’s PTE.

In the case of PM2.5, this is the situation because the Air District has never submitted a 

demonstration of RFP or attainment, is it has never been required to. Instead, the Air District requested 

that EPA approve a “Clean Data Determination” for the Bay Area, which suspends the RFP and 

attainment demonstration requirements. EPA agreed and approved the Clean Data Determination,41

and as a result the Bay Area has never had an RFP or attainment demonstration for PM2.5 because none 

has ever been required. Given this situation, the Bay Area by definition cannot trigger the requirement 

to use an actual emissions baseline for PM2.5 because it has an RFP/attainment demonstration that is 

based on actual emissions. The Bay Area does not have an RFP/attainment demonstration for PM2.5 at 

all, and so EPA cannot find that it has a demonstration based on actual emissions. There is therefore no 

way that the exception requiring the use of an actual emissions baseline can apply for PM2.5.

42

 

The situation is the same for ozone precursors (NOx and VOC). Although the Air District has 

submitted attainment/RFP demonstrations in the past, is currently using ambient air quality monitoring 

data, not on an “actual emissions” inventory, to determine the Bay Area’s ozone NAAQS attainment and 

RFP. EPA has in fact proposed to determine that the Bay Area is in attainment of the ozone NAAQS 

based on this information, which EPA describes as “based on complete, quality-assured and certified 

 

PTE (to the extent that there is nothing else restricting emissions to even lower levels). As a result, the PTE 

concept effectively incorporates both parts of the two-part test in 40 CFR Section 51.165(a)(3)’s default baseline 

rule. 

Furthermore, the Air District’s ERC calculation rules provide that the PTE baseline must be adjusted downwards to 

take account of any applicable SIP limitations. (See Dist. Reg. 2-2-605.2(i).) Accordingly, even if the PTE baseline 

did not already incorporate such SIP limitations, they would still be taken into account in the ERC calculation 

procedures, and ERC credit would be allowed only up to the level of the applicable SIP limitation. This is an 

additional reason why the Air District’s PTE baseline for fully offset sources is consistent with both elements of the 

two-part test of the default baseline rule set forth in 40 CFR Section 51.165(a)(3). 

39 40 CFR Section 51.165(a)(3)(i)(A).

40 40 CFR Section 51.165(a)(3)(i)(B).

41 See Determination of Attainment for the San Francisco Bay Area Nonattainment Area for the 2006 Fine Particle 

Standard; California; Determination Regarding Applicability of Clean Air Act Requirements, Final Rule, 78 FR 1760 

(Jan. 9, 2013).

42 The exception in 40 CFR Section 51.165(a)(3)(i)(B) for situations where there is no emissions limitation in the SIP 

for a source or source category is not implicated in the Bay Area either. Given the comprehensive nature of the Air 

District’s regulatory program, it is highly unlikely that there could ever be a major source for which there is no 

emissions limitation in the SIP for that source or source category. To the extent that EPA is concerned that there 

could hypothetically be such a source, the Air District could consider adopting a “backstop” provision requiring an 

actual emissions baseline for fully offset sources for which there is no emissions limitation in the SIP for that source 

or source category. 
37

ozone monitoring data for 2012-2014” – not on an actual emissions inventory.43 This is the current 

demonstration that EPA itself is using for regulatory purposes for implementing the NAAQS in the Bay 

Area, and it is not based on actual emissions. There is therefore no way in which the Bay Area can 

trigger the exception requiring the use of an actual emissions baseline for NOx and VOC either. 

In light of this situation, the Air District submits that EPA should reconsider its analysis and 

conclusion that an actual emissions baseline must be used for calculating the amount of ERCs available 

for the shutdown and curtailment of fully offset sources in the Bay Area. EPA should continue to 

approve the Air District’s use of the PTE baseline for fully offset sources, consistent with EPA’s 

longstanding practice of allowing the Air District to use this approach for many years. In particular, EPA 

should reconsider its analysis of the regulatory language in 40 CFR Section 51.165(a)(3) that establishes 

the default rule to use the source’s PTE, except where there is an RFP/attainment demonstration that is 

based on an actual emissions inventory. EPA cannot invoke this exception where there is no 

RFP/attainment demonstration at all, which is the case for PM2.5. And EPA cannot invoke this exception 

where the current demonstration is based on ambient monitoring data and not on an actual emission 

inventory, which is the case for NOx and VOC. For all of these reasons, EPA should approve the Air 

District’s ERC calculation provisions in Section 2-2-605. 

VIII. EPA’S PROPOSAL TO DISAPPROVE THE AIR DISTRICT’S THRESHOLD FOR CONDUCTING A

CLASS I AREA VISIBILITY IMPACTS ANALYSIS

EPA’s visibility regulations provide that State NSR programs must require an analysis of visibility 

impacts on Class I areas for projects that “may have an impact on visibility” in a Class I area. (40 CFR 

§ 51.307(b).) For any new major source or major modification that “may have an impact on visibility” in 

a Class I Area, the applicant is required to prepare a visibility impact analysis, and the permitting 

authority is then required to forward a copy of that analysis to the Federal Land Manager for the Class I 

Area to begin a consultative process to evaluate whether there will in fact be any adverse impacts to any 

air quality related values in the Class I Area. The regulations do not specify how States need to define 

what projects “may have an impact” for the purpose of triggering this requirement, however. 

EPA has adopted a policy that this “may have an impact” language means that any facility within 

100 km of a Class I area is subject to this requirement. This policy is stated on EPA Region IX’s web 

pages addressing the visibility impact analysis requirements, among other places. As the website says, 

“40 CFR Section 51.307 requires the operator of any new major stationary source or major modification 

located within 100 kilometers of a Class I area to contact the Federal Land Managers for that area (to 

coordinate the visibility impact analysis process).”

44

 Based on this guidance, the Air District revised its 

 

43 Determinations of Attainment by the Attainment Date, Extensions of the Attainment Date, and Reclassification of 

Several Areas Classified as Marginal for the 2008 Ozone National Ambient Air Quality Standards, Proposed Rule, 80 

FR 51992 (Aug. 27, 2015).

44 See www.epa.gov/region9/air/maps/r9_clss1.html; see also www.epa.gov/region9/air/maps/flm.html (stating 

same 100 km threshold). 
38

Class I Area visibility protection requirement in Section 2-2-401.4 in its NSR rules to provide that any 

new major source or major modification located within 100 km of any Class I Area must prepare an 

analysis of potential visibility impacts in that Class I Area for consideration by the Area’s Federal Land 

Manager. 

EPA now proposes to disapprove this requirement because of the 100 km threshold for when 

the analysis is required. EPA states that this does not satisfy the requirement in Section 51.307(b)(2) to 

require an analysis for any source that “may have an impact on visibility in any mandatory Class I Federal 

area.” (See 80 FR at p. 52241, col. 1; TSD § 6.2.4, p. 60, § 7.3.9, pp. 111-112, and p. 136, Deficiency Item 

#9.)

Comment VIII.1.: The Air District’s 100 km Threshold Is An Appropriate Way To Define 

What Sources “May Have An Impact On Visibility” In A Class I Area 

EPA has not specified any basis for finding that the Air District cannot use its 100 km threshold 

for determining when a source “may have an impact on visibility in any mandatory Class I Federal area”

such that a Class I visibility analysis is required. EPA’s only explanation for its proposed disapproval is to 

state the following: 

While the 100 km distance from a source to a Class I area is specified in the PSD program 

as the distance at which a visibility analysis must be performed, limiting the required 

analysis to sources within this distance does not satisfy 40 CFR 51.307(b)(2) which 

requires an additional analysis for any source that “may have an impact on visibility in 

any mandatory Class I Federal Area.” 

(TSD at p. 112-13.) This is a circular analysis that simply cites its conclusion as the basis for its premise. 

It merely states that the Air District’s threshold for determining what sources “may have an impact on 

visibility” under 40 CFR 51.307(b)(2) does not satisfy the regulation’s requirements because it does not

encompass all sources that “may have an impact on visibility.” It does not explain why the 100 km 

threshold is not an appropriate way to define what sources “may have an impact on visibility.” EPA

cannot disapprove the Air District’s 100 km threshold on this basis.

Moreover, the Air District’s 100 km threshold is fully supported as an appropriate means 

through which to implement Section 51.307(b)’s “may have an impact on visibility” requirement. Local 

permitting authorities enjoy the discretion to implement EPA’s regulatory requirements in the manner 

that they find most appropriate, as long as they satisfy applicable regulatory requirements. The 100 km 

threshold is clearly an appropriate way to define what sources “may have an impact,” as this is the very 

rule that EPA uses, as specified on Region IX’s website and in related policy guidance documents. EPA 

cannot disapprove the Air District’s program for using a threshold that EPA itself has found to be 

appropriate under Section 51.307(b).

EPA has suggested in some of its guidance documents that in some cases it may be appropriate 

to include additional facilities that are more than 100 km from any Class I area. But EPA has never 

articulated any requirement for doing so, and it has never specified any rule for determining when or 
39

how such additional facilities should be subject to the requirement. The only specific policy that EPA has 

ever provided in any EPA guidance document is the 100 km threshold that the Air District uses in Section 

2-2-401.4. EPA cannot find the Air District’s rule deficient for failing to use a different standard where

EPA has never articulated one in any of its guidance documents – let alone mandated it for use under 40 

CFR Section 51.307(b).

EPA did make a passing reference in its TSD to unspecified guidance issued by Federal Land 

Managers. During subsequent discussions with EPA Region IX staff during the comment period, EPA

provided a document from the Federal Land Managers’ Air Quality Related Values Working Group

(“FLAG”), which cites a test for including additional facilities if their emissions (in tons per year) divided 

by their distance from the Class I area (in km) exceeds 10 tons per year per km.45 EPA has not indicated 

why this guidance from the Department of the Interior is a required approach for implementing the 

“may have an impact” language in EPA’s visibility regulations in Section 51.307(b), however – especially 

where EPA itself has published a different policy. Nor has EPA specified how this document limits a local 

permitting authority’s discretion in determining how to implement Section 51.307(b). There is no 

indication from this document that 100 km is not also an appropriate threshold that can be used as an 

alternative if a state prefers it, given EPA’s guidance specifying the 100 km limit. 

Furthermore, it is clear that EPA has not other California air districts to use the FLAG guidance 

document’s approach, which shows that it cannot in fact be a required approach. For example, during 

the rule development process, EPA suggested that the Air District should look to Rule 1303 of the South 

Coast Air Quality Management District as an example of an approvable threshold for implementing 

51.307(b).46 That rule specifies distances of 28 km to 32 km (depending on the Class I Area). The fact 

that EPA approved a South Coast rule that uses a different approach than the one provided in the FLAG

guidance document demonstrates that that guidance cannot be mandatory or required in order to 

satisfy Section 51.307(b).47 

The Air District submits that EPA should approve the Air District’s 100 km threshold as a 

reasonable and appropriate manner to determine what sources “may have an impact” on visibility in 

Class I Areas pursuant to Section 51.307(b)(2). This approach is consistent with the 100 km test stated 

on EPA’s website, and EPA has not provided any reason why a different rule is required under the 

regulation. EPA should approve the Air District’s rule as within the District’s discretion to interpret this 

requirement in its NSR rules.

 

45 See National Park Service, U.S. Department of the Interior, Federal Land Managers’ Air Quality Related Values 

Work Group (FLAG) Phase I Report-Revised, Natural Resource Center Report No. NPS/NRPC/NRR—2010/232 (Oct. 

2010), provided with email from A. Lyons (EPA Region IX) to A. Crockett (BAAQMD) (Aug. 31, 2015). As an 

example, this threshold would require a source emitting 1500 tpy to conduct a visibility impacts analysis if it is 

within 150 km from a Class I Area, as 1500 tpy divided by 150 km equals 10 tpy/km. Similarly, source emitting 

2000 tpy would have to conduct the analysis if it is within 200 km from a Class I area. 

46 EPA’s Preliminary Comments - Draft BAAQMD rules as of January 25, 2012 (March 15, 2012).

47 EPA has also approved the Placer County APCD’s rule, which does not require any analysis for any sources 

beyond 20 miles from a Class I Area. See Placer County APCD Rule 502 (New Source Review), Section 304.3 

(Potential Visibility Impacts). 
40

Comment VIII.2.: EPA Should Explain Its Interpretation Of What Section 51.307(b)(2) 

Requires And How Much Discretion It Believes Local Permitting Authorities Have Under 

That Section

To the extent that EPA continues to believe that the Air District’s 100 km threshold is not 

approvable under Section 51.307(b)(2), then EPA should at the very least (i) explain what exactly Section 

51.307(b)(2) requires, in EPA’s interpretation; (ii) provide a legal justification for that interpretation, 

based on the applicable statutory and regulatory provisions and other appropriate authorities; (iii) 

explain with specificity why the Air District’s rule does not satisfy the requirement; and (iv) explain the 

standard under which EPA will evaluate any revised approach in a future submittal.

48

 The Air District 

wants to ensure that its NSR rules satisfy all applicable federal NSR requirements, including the visibility 

requirements. But in order to design a visibility protection rule that will satisfy those requirements, the 

Air District needs to know what they are. If EPA is going to interpret the “may have an impact on 

visibility” language in Section 51.307(b)(2) to require something other than the 100 km threshold 

provided on EPA Region IX’s website and in its guidance documents, it should clearly explain what is 

required and how it will evaluate any future rule submission for compliance or non-compliance with that 

requirement. 

IX. LEGAL EFFECT OF ANY “LIMITED DISAPPROVAL” ON FEDERAL ENFORCEABILITY OF THE AIR 

DISTRICT’S NSR PROGRAM PROVISIONS

EPA describes the action it is proposing as a “limited approval and limited disapproval” of the Air 

District’s NSR rules. If EPA takes final action as proposed, the Air District understands this to mean that 

the Air District’s NSR rules (District Regulations 2-1 and 2-2) would become effective in their entirety as 

federally-enforceable SIP rules. The Air District understands that the proposed “limited disapproval” 

would not mean that certain specific provisions in the District’s regulations would not be federallyenforceable SIP rules, even though EPA may find that they reflect a deficiency for the reasons stated in 

the Proposal. The Air District understands that the effect of any “limited disapproval” would be to 

approve Regulations 2-1 and 2-2 in their entirety, but to require the Air District to adopt revisions to 

certain provisions to address any identified deficiencies and submit them for approval by EPA by a 

stated deadline. (See 80 FR at p. 52243, col. 1-2.)

It is important that any final action by EPA take effect as outlined in the preceding paragraph. 

The Air District’s NSR rules function as a comprehensive whole, and each individual provision is 

 

48 E.g., is the FLAG approach required as the only permissible approach to determining what sources “may have an 

impact on visibility”? If so, why is that the only way that Section 51.307(b)(2) can be satisfied? Can permitting 

authorities use a “bright-line” test specifying a certain distance from a Class I Area within which the analysis is 

required, as the South Coast air district has done in its Rule 1303? If so, what are the limitations on an agency’s 

discretion to establish a “bright line” threshold distance?
41

necessary for the overall permitting system to operate properly.49 If EPA were to approve the rules in a 

manner that made most of them federally enforceable but left a few specific provisions not federally 

enforceable because of an identified deficiency, it would be virtually impossible to determine what parts 

of a permit issued under the rules are federally enforceable – or even whether the permit is enforceable 

at all under the Clean Air Act. Such a result would lead to chaos in trying to implement or enforce NSR 

permits from a federal perspective. The Air District therefore strongly supports the approach outlined in 

the preceding paragraph.

Comment IX: If EPA Finalizes a Limited Approval and Limited Disapproval, EPA Should 

Explain That The Air District’s NSR Regulations In Their Entirety Are Effective As 

Federally Enforceable NSR Requirements, Subject To A Requirement For The Air District 

To Submit Revisions To Address Any Deficiency Items 

If EPA finalizes a limited approval and limited disapproval, it should make clear that the legal 

effect of such an action is to make the Air District’s NSR rules as a whole part of the California SIP and 

federally enforceable under the Clean Air Act. EPA should make clear that any limited disapproval 

means only that the Air District must re-submit revised rules addressing any identified deficiencies. EPA 

should make clear that any limited disapproval does not carve out any specific provisions in the Air 

District’s NSR rules and exclude them from the Bay Area’s approved SIP NSR program or from federal 

enforceability under the Clean Air Act, which we believe is EPA’s intent if it finalizes a limited approval 

and limited disapproval as proposed.

 

49 It is possible in some cases for the Air District to create specific elements of its rules that it does not intend to 

submit to EPA for approval into the SIP. Indeed, such an approach may be necessary where the Air District wants

to adopt an element in its NSR program that EPA cannot approve into the SIP for some reason. Where the Air 

District does adopt such provisions, however, it crafts them carefully so that they are severable and that the rules 

that are submitted into the SIP function properly as a complete regulatory program. The Air District has not 

drafted its current NSR rule with an intention to create any such severable provisions. To the contrary, the Air 

District’s NSR rules are intended to work together in their entirety, and it is important that EPA’s method of 

approval makes them federally enforceable in their entirely as a complete regulatory package.