San Joaquin Valley Unified Air Pollution Control District Rules 2020 and 2201, as amended September 21, 2006

District’s Clean Air Act 110(l) Analysis

Background

The District has submitted to EPA, through the state Air Resources Board, revisions to two rules to incorporate provisions of state law. Prior versions of both rules have been previously approved into California’s State Implementation Plan (SIP). EPA has asked that the District explain how

these revisions do not interfere with the emissi on reduction commitments, or with the associated attainment demonstration, contained in the District ’s attainment plans. While the information in this document is provided to add depth and detail, it is possible to make the following categorical

statement:

No attainment plan has been adopted by the District which relies on emissions reductions that depend on ag ricultural permitting requirements, where such permitting requirements are inconsistent with state law. Therefore, these rule revisions, which consist entirely of directly incorporating, by reference, state law regarding agricultural permitting requirements, can not possibly relax any attainment plan emission reduction commitment or any associated attainment demonstration.

Specifically, the following changes have been made to District rules:

Rule 2020, Exemptions , has been modified to incorporate by reference California Health and Safety Code Section 42301.16, which establishes a permitting threshold for agricultural sources of emissions in the stat e of California, at approximately one-half the federal major source permitting thresholds. For agricultural facilities with emissions below this state-mandated agricultural permitting threshold, Districts can only require sources to obtain permits if certain findings are made.

Rule 2201, New and Modified Stationary Source Review , has been modified to incorporate by reference CH&SC Section 42301. 18(c). This section prohibits Districts from requiring offsets of agricultural sour ces unless certain criteria have been met that allow such sources to bank emissions reductions from the same types of emissions

sources.

If EPA chooses to treat this SIP submittal as a revision to the SIP, rather than a correction of prior approvals, Section 110(l) of the Clean Air Act prohibits EPA from approving such a plan revision if it would interfere with any applicable requirement concerning attainment, reasonable further progress, or any other applicable requirement of the Act.

The following is an analysis demonstrating that approval of these rules into the SIP does not interfere in any way with the District’s at tainment efforts and does not relax any prior commitments contained in the District’s attainment plans.

District Attainment Plans Never Relied on Ag Permitting Requirements

First of all, it’s important to point out that the District’s attainment plans (including demonstrations of reasonable further progress) have never relied on emissions reductions that required enforcement via agricultural permitting programs that would be contrary to state law. In fact, Districts and states are required by Section 110(a)(2)(E) of the Act to provide assurances that they have “adequate personnel, funding, and authority under State (and, as appropriate, local)

DW – 11/20/07 Page 1law to carry out such implementation plan (and (are ) not prohibited by any provision of Federal or State law from carrying out such implementation plan or portion thereof)...''

Therefore, had the District adopt ed rules that relied on permitting authorities that were illegal under state law, the state Air Resources Board and the federal EPA would have been obligated to disapprove such plans. Neither ARB nor EPA have di sapproved plans on this basis, and in fact, as of the date of this writing, at least two of the plans discussed in this document, the 2002 Ozone Rate of Progress Plan and the 2003 PM10 Atta inment Plan, have been fully approved by EPA.

Early Plans Did Not Anticipate or Commit to Reductions From Agricultural Sources

Early discussions of the District’s limitations on effectively regulating agricultural sources in light of the state agricultural exem ption can be found in the plans adopted prior to SB700 modifying the exemption. For instance, see page 4-6 of the District’s SIP-approved 2002 Ozone Rate of Progress Plan, where the District mentions agricultural irrigation engines in a list of control measures that deserves further study, but notes as a potential difficulty, “State law precludes permitting these units, and a prohibitory rule would be difficult to enforce without permitting.”

Later Plans Require Alternate Enforcement Techniques

In developing later plans, the District became conv inced that reductions from agricultural sources would be required in order to attain air quality standards, and the related enforcement mechanisms became a vital consideration as rules were developed to implement those reductions. Where the District was prohibited by state law from permitting agricultural sources,

alternate enforcement mechanisms were devel oped and adopted to assure these necessary reductions. The following are three more recent examples of District attainment plan commitments requiring reductions in agricultural emissions in the San Joaquin Valley, including a discussion of their respective enforcement mechan isms that were developed as a part of the ruledevelopment process:

1. Rule 4550, Conservation Management Practices , was a commitment of the District’s 2003 PM10 Attainment Plan, adopted in June of 2003 and amended in December of 2003. Page 4-23 of the plan begins the disc ussion of the potential rule, and includes

discussion of an enforcement mechanism that did not rely on permitting regulations. Rather, the District would require agricultural operations to submit Conservation Management Practice (CMP) Plans, which the District would then review and, after finding compliance with the rule, issue CMP Plan Approvals, which are detailed written

documents that are enforceable by the District’s complianc e staff. The rule was adopted in May of 2004. No permits are required for compliance with this rule, or to enforce the reductions that are generated by the rule – CMP Plan Approvals are used for this purpose. The District’s ability to permit these sources does not affect the District’s ability to assure that the reductions continue, and so these permitting rule revisions can have no affect on our ongoing compliance with our attainment plan commitments.

2. Rule 4570, Confined Animal Facilities , was a commitment in our 2004 Ozone Attainment Plan (see page 4-19 for a discussion). In this case, during the development of the rule the District made the findings required by California Health and Safety Code, section 42301.16, to allow the District to require permits of facilities subject to the rule. Nothing in the proposed rules alters our ability to continue to require permits of the affected sources, since we’re merely incorporating 42301.16 by reference, so again, there can be no affect on our ability to assure the reductions continue.

3. Amendments to Rule 4702, Internal Combustion Engines – Phase II , to include engines used in agricultural operations, were also commitments of our 2004 Ozone Plan (page 4-

DW – 11/20/07 Page 215). The rule amendments were adopted June 16, 2005, and required that all affected engines be covered by one of two enforceme nt mechanisms, either a permit or a new registration requirement set up under Rule 2250, Permit Exempt Equipment Registration

, that was designed specifically as an enforcement tool for equipment that is exempt from permitting, like engines on smaller farms. Nothing in the changes to Rules 2020 or 2201 affects our ability to continue enforcing the redu ctions through one or the other of those mechanisms, so again we will continue to meet our attainment plan commitments.

The consistent element in these examples is that the District took the necessary steps to assure that the reductions required by our attainment plans were enforceable, whether permits were allowed by state law, or not. The inclusion of re ferences to these same existing state laws in District rules does nothing to a ffect those plans, the rules, or the enforceability of the plans’ reductions, and therefore can do nothing to a ffect the associated attainment demonstration.

District Attainment Plans’ Permitting Commitment s Are Consistent With State Ag Permitting Law

District attainment plans have historically di scussed permitting requirements in a couple of contexts, and we will examine those areas of the pl an as well, to look for potential relaxations related to ag permitting. First, the District’s plans generally commit to adopting any changes to Rule 2201, New and Modified Stationary Source Review (NSR), that are mandated by federal regulations applicable to the pertinent attainment classification. Second, the District’s plans include a discussion regarding the use of emission reduction credits as mitigation for increases in emissions allowed by new or modi fied sources of air pollution.

1. Permitting Regulations: Regarding the first issue, the District has never included in these plans any discussions of permitting requirements that exceed the authority allowed by state law (again, we cannot, as such a plan would not be approv able by the state or federal governments according to Section 110(a)(2)(E) of t he Act). Plans adopted before January 1, 2004

included no consideration at all of New Sour ce Review requirements for agricultural sources. Plans adopted after SB 700 became law considered SB 700 fully applicable, including the small agricultural operat ion permitting exemption (CH&SC Section 42301.16) and limitations on offsetting re quirements (CH&SC Section 42301.18(c)). Therefore, no agricultural permitting requiremen ts that are inconsistent with these state permitting laws have ever been included in any District attainment plan.

2. Emission Reduction Credits: As to the second permitting issue, District attainment plans have contained calculations with respect to anticipated ERC-use. In establishing the expected ERC-use for the period of each plan, the District attributes no ERC-based mitigation to the growth in emissions from agricultural sources, becaus e state law establishes limits on Districts requiring such offsets, the very same limits that the District is currently proposing be incorporated into their NSR rule. Specifically , the growth in emissions is established by ARB’s area source inventory growth methodologi es, but no mitigation of that growth is considered when determining the impact of the growth on the District’s ability to achieve the attainment with the respective standard , because state law prohibits requiring such mitigation (see Chapter 3 of both the 2002 Ozone Rate of Progress Plan and the 2003 PM10 Attainment Plan, both fully approv ed by EPA; and see Chapter 3 of the 2004 Ozone Attainment Plan and Appendix D of t he 2007 Ozone Attainment Plan, neither of which has yet been approved by the EPA). To recap, ERC-mitigation of agricultural source emissions growth has never been anticipated in District attainment plans, because agricultural sources are exempted by state law from supplying such mitigation, and so incorporating that same state law, by reference, into District rules can have no affect on any attainment demonstration that incorporates ERC-use into its calculations.

DW – 11/20/07 Page 3Conclusion

The consistent point throughout this discussion is that the District considered state law applicable to agricultural operations in all respects as a ttainment plans were developed. The control measures, permitting discussions, and attainment demonstrations contained in those plans did not rely on permitting of agricultural operations for the enforcement of emissions reductions, except where permissible according to state law. Rather, they relied on alternative means, where necessary, to assure that the necessary reductions were achieved. The rule revisions discussed here merely create a consistency between District rules and those state laws that have always constrained the District’s historical actions, and it is therefore not possible for these rule revisions

to affect the District’s attainment demonstrations.

DW – 11/20/07 Page 4