Document ID: EPA-R03-OAR-2010-0856-0004
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2011-05-23T04:00Z

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

REGION III

	1650 Arch Street

	Philadelphia, Pennsylvania  19103

DATE:	February 22, 2011

SUBJECT:	Technical Support Document - Virginia, Permits for Major
Stationary Sources and Major Modifications Locating in Prevention of
Significant Deterioration (PSD) Areas 

			/s/

FROM:	Sharon McCauley, Environmental Protection Specialist

Office of Permits and Air Toxics (3AP10) 

TO:		File

			

THRU: 	Kathleen Anderson, Associate Director

Office of Permits and Air Toxics (3AP10)

I.	BACKGROUND

Virginia’s proposed SIP submission addresses changes needed in the
part C PSD permit program.  This SIP submission also corrects
deficiencies identified by EPA in the March 27, 2008 Federal Register
notice entitled, “Completeness Findings for Section 110(a) State
implementation Plans for the 8 hour Ozone National Ambient Air Quality
Standards (1997 Ozone NAAQS)”, (73 FR 16205).  EPA’s proposed
approval of this SIP submission addresses Virginia’s compliance with
the portion of CAA Section 110 (a)(2)(C) & (J) relating to the Part C
permit program for the 1997 NAAQS Ozone NAAQS, because this proposed
approval would approve regulating NOx as a precursor to Ozone in
Virginia’s SIP in accordance with the Federal Register notice dated
November 29, 2005 (70 FR 71612) that finalized NOx as a precursor for
Ozone regulations set forth at 40 CFR 51.166 and in 40 CFR 52.21.  

EPA’s review of the VA DEQ Regulatory Revision Package was found to be
acceptable for adding nitrogen oxides (NOx) as a precursor for Ozone
(O3) for PSD. The current changes to the Virginia program, as described
in detail in Section IV, are from 9 VAC-5- Chapter 80 Article 8, Permits
for Major Stationary Sources and Major Modifications Locating in
Prevention of Significant Deterioration (PSD) Areas.  This current
change will add NOx as a precursor to Ozone, in addition to volatile
organic compounds (VOC), in the definitions of “major modification”,
“major stationary source”, “regulated New Source Review (NSR)
pollutant” and “significant” and to the list of exempted
facilities.  The previous PSD State Implementation Plan (SIP) approval
was provided to the Commonwealth as a limited approval for other reasons
as cited in Section II, below.

The Federal PSD program has undergone several relevant changes since the
last State SIP limited approval of its PSD permitting program dated
October 22, 2008 in 73 FR 62897.  

The following provides a summary of the final federal provision changes
that occurred from the previous “limited approval” which included
federal PSD regulations as of September 1, 2006 through the present that
will not be a part of this revision request to Virginia's regulatory PSD
SIP approval of the “NOx as a precursor to Ozone” element of their
program.

1.   Final Changes for Certain Ethanol Production Facilities Under Three
Clean Air Act Permitting Programs

On April 12, 2007 EPA’s final action modified the definition of a
"chemical process plant" as it applies to three Clean Air Act permitting
programs.

2.  Prevention of Significant Deterioration (PSD) and Nonattainment New
Source Review (NSR): Removal of Vacated Elements

On June 5, 2007 EPA removed provisions for pollution control projects
(PCP) and clean units (CU) from its New Source Review (NSR) regulations.
These provisions were part of EPA’s NSR improvement rule issued on
December 31, 2002. On June 24, 2005, the United States Court of Appeals
for the District of Columbia Circuit vacated the portions of the 2002
and 1992 NSR rules that pertained to CU and PCP.

3.   Rule Clarification Assures that New Source Review Program is
Applied Appropriately

On December 14, 2007 EPA issued a final rule to clarify when facilities
must keep records and report emissions when a “reasonable
possibility” test shows that projected emissions increases could equal
or exceed 50 percent of the Clean Air Act’s NSR significant levels for
any pollutant. This rule does not change permitting requirements.

4.  EPA Issues Final Rules Governing the Implementation of NSR for Fine
Particulate Matter

On May 8, 2008, the Environmental Protection Agency (EPA) issued final
rules governing the implementation of the New Source Review (NSR)
program for particulate matter less then 2.5 micrometers in diameter
(PM2.5). PM2.5 also is known as fine particles. This rule finalizes
several NSR program requirements for sources that emit PM2.5 and other
pollutants that contribute to PM2.5

5.  EPA Finalizes Rule Reconsidering Inclusion of Fugitive Emissions

On December 10, 2008, EPA finalized revisions to the December 31, 2002
New Source Review (NSR) Improvement rules to change the requirements of
the major NSR programs regarding the treatment of fugitive emissions.

6.  EPA issues an interpretive memorandum entitled "EPA's Interpretation
of Regulations That Determine Pollutants Covered by Federal Prevention
of Significant Deterioration (PSD) Permit Program."

On December 18, 2008 the Administrator issued an interpretive memorandum
entitled "EPA's Interpretation of Regulations That Determine Pollutants
Covered by Federal Prevention of Significant Deterioration (PSD) Permit
Program."

7. Final Rule Defines Approach for Grouping Projects under the New
Source Review Permitting Program

On January 12, 2009, EPA issued a final rule that revises the agency’s
policy on “aggregation.” For the purpose of determining whether NSR
applies, this rule directs facilities and permitting authorities to
combine, or aggregate, emissions from plant modifications when those
projects are related. Thus, total emissions for the related projects
must be considered when permitting authorities determine whether NSR
applies. 

8. Denial of Petitions to Reconsider Aspects of the PM2.5 NSR
Requirements and Reasonable Possibility Rule

January 15, 2009 - EPA has denied two petitions for reconsideration of
two final rules under the New Source Review permitting program for PM2.5
Requirements and Reasonable Possibility Rule.  

9. EPA Reconsiders New Source Review Final Rule

February 9, 2009 - To allow further review of the January 15, 2009,
final rule modifying the NSR air permitting program’s
“aggregation” policy, EPA is extending the effective date of the
rule. This action is in response to the White House’s January 20,
2009, and the Office of Management and Budget’s January 21, 2009,
memoranda regarding regulatory review. EPA also will reconsider one or
more of the aspects of this final rule raised by the Natural Resources
Defense Council in a petition for reconsideration. To allow time for the
review and the reconsideration, EPA will stay the effective date of this
rule for 90 days, until May 18, 2009.

10. Granting of Petitions to Reconsider Aspects of the Reasonable
Possibility, Fugitive Emissions and PM2.5 NSR Permitting Rules

April 24, 2009 - EPA notified petitioners of its intent to reconsider
portions of three rules under its New Source Review (NSR) permitting
program.

11. EPA extends effective date of the aggregation rule for 1-year

May 8, 2009 - This final rule extends until May 18, 2010, the effective
date of the January 12, 2009 aggregation rule. During this time, EPA
will reconsider the final aggregation rule. 

12. Stays the "Grandfathering" Provision for the PM2.5 NSR Permitting
Rule for Nine Months

September 16, 2009 - EPA staying until June 22, 2010 the
"grandfathering" provision for particulate mater less than 2.5
micrometers (PM2.5) requirements in the Federal Prevention of
Significant Deterioration (PSD) program published in the Federal
Register on May 16, 2008.

13. Final Rule Facilitates the use of Flexible Air Permits

September 25, 2009 - Flexible air permits enable major air emissions
sources to implement operational plans and make anticipated changes to
these plans without further review and approval. These permits do not
provide approval for operational changes outside the scope authorized in
the initial permit and sources must still meet all Clean Air Act
requirements that apply to them. Pilot studies have shown that flexible
permitting approaches can minimize the need for permit revisions,
provide significant economic benefits, encourage innovation, and
increase public awareness -- all while ensuring equal or greater
environmental protection.

14. Approval and Promulgation of Wisconsin NSR Reform Regulations:
Denial of Petition for Reconsideration

January 20, 2010 - EPA responded to a petition from the NRDC and Sierra
Club. Their petition requested that EPA reconsider and stay of certain
parts of the Wisconsin's SIP. After carefully reviewing the petition for
reconsideration, EPA has denied it. EPA also denied NRDC's request for a
stay of the final rule approving the Wisconsin state plan. 

15. Stay of Fugitive Emissions Rule for 18 Months

March 24, 2010 - EPA has stayed for 18 additional months, the rule
establishing how fugitive emissions should be treated for New Source
Review permitting. A previous stay will expire on March 30, 2010. 

16. Stay of Aggregation Rule 

May 6, 2010 - EPA extended the effective date of the January 15, 2009
final rule that modified the New Source Review air permitting
program’s policy on “Aggregation.”

17.  Final GHG Tailoring Rule

May 13, 2010 - EPA sets greenhouse gas (GHG) emissions thresholds to
define when permits under the New Source Review Prevention Significant
Deterioration (PSD) and title V Operating Permit programs are required
for new and existing industrial facilities. The State has the authority
to regulate GHGs, however, the State will now need to adopt the
equivalent federal threshold levels for GHGs based on the Tailoring
Rule. 

18.  Final Rule to Establish Increments, Significant Impact Levels and a
Significant Monitoring Concentration for Fine Particle Pollution

September 29, 2010 - EPA had established key components for making PSD
permitting determinations for fine particle pollution increments,
significant impact levels (SILs), and a significant monitoring
concentration.

19.  Greenhouse Gas Emissions                                           
                                              December 1, 2010 - Final
rule which requires certain states to make changes to their state
implementation plans to cover greenhouse gas (GHG) emissions in Clean
Air Act permits. These changes will ensure that beginning in January
2011 GHG emissions sources can obtain permits.  Virginia is not one of
these States. 

20.  Clean Air Act Permitting for Greenhouse Gas Emissions

On December 23, 2010, the U.S. Environmental Protection Agency (EPA)
issued a series of rules that put the necessary regulatory framework in
place to ensure that 1) industrial facilities can get Clean Air Act
permits covering their greenhouse gas (GHG) emissions when needed and 2)
facilities emitting GHGs at levels below those established in the
Tailoring Rule do not need to obtain Clean Air Act permits. 

EPA has determined that the proposed amendments to Virginia's prevention
of significant deterioration (PSD) permit program at 9 VAC-5- Chapter 80
Article 8, as submitted on June 7, 2010, meet the minimum requirements
of 40 CFR 51.166 and the Clean Air Act for regulating NOx as a precursor
to Ozone. This amendment alone is being proposed for full approval as a
revision to the Virginia SIP.  This action does not supersede the prior
“limited approval” of the Virginia PSD program for the following
issues.

II.       PRIOR LIMITED APPROVAL OF VIRGINIA’S PSD PROGRAM

The following is an explanation for the limited approval of the previous
SIP revision by EPA.  In Virginia’s regulations under 9 VAC 5- Chapter
80-1615 (Article 8) definitions were added to reflect the necessary
changes to the program found in the 2002 federal NSR Reform rule.     

Virginia’s definition for “baseline actual emissions” varied from
the federal definition at 40 CFR 51.166(b)(47) in two ways.  First, for
both electric generating units (EGUs) and non-EGUs, Virginia’s rule
allowed the use of different baselines for different pollutants if the
owner could demonstrate to the satisfaction of the Board that a
different baseline period for a different pollutant(s) was more
appropriate due to extenuating circumstances.  EPA proposed a full
approval on this variation.  However in the second instance, for
non-EGUs, the 24-month baseline period must occur within the five-year
period preceding the date the owner began actual construction or the
permit application was deemed complete, whichever was earlier, unless
the Board allowed a different time period that it deemed more
representative of normal source operations.  The allowance of a
different or an extended time period by the Board was acceptable as it
allowed a time period past the more restrictive 5-year period, however,
the Commonwealth’s regulations did not further limit the Board from
allowing a time period which could extend past the 10-year period
currently provided in the federal NSR Reform rule.     

The Virginia regulations therefore met the general federal criteria for
expanding the lookback period beyond the old requirement of the most
recent 24-month period, and were thus equivalent to the federal
requirement.  The purpose of an extended lookback is to establish a
period that is most representative of source operation.  Establishment
of the most representative operation not only enables sources to plan
effective emissions control strategies, it also provided Virginia with
more accurate information on which to base long-term air quality
planning strategies.  The 5-year lookback can be seen to be more
restrictive or at times more stringent than the Federal rule.  Requiring
a 5-year lookback instead of a 10-year lookback could, however, limit a
source’s potential to find a higher baseline.  This could in turn
restrict a source’s ability to emit and is thus inherently more
protective than the EPA regulations. 

The Commonwealth provided a more detailed explanation of the 5-year
lookback period in their SIP revision request.  The following was an
excerpt from the Commonwealth’s “Technical Support Document” for
their last approval request.  

“Virginia has numerous reasons for taking a somewhat conservative
approach to revising its new source review program.  These reasons cover
a variety of issues, from public health and air quality, to
administrative and operational concerns, and are discussed in detail
below. While many aspects of the EPA rule will likely result in some air
quality benefit when applied in Virginia, the Commonwealth’s overall
air quality situation can benefit from a certain changes to the EPA
requirements.  § 10.1-1308 of the Code of Virginia states, “The
regulations shall not promote or encourage any substantial degradation
of present air quality in any air basin or region which has an air
quality superior to that stipulated in the regulations.”  In other
words, no regulation may contribute to the deterioration of air quality.
 Given the uncertainty of specific impacts that implementing the federal
rules will have on the areas of the state that are attaining the
national standards, it is believed that a certain limitations on some
aspects of the federal rules may help ensure that this state-specific
need is met.

In addition to ensuring that areas of the state that meet the national
standards continue to do so, the Commonwealth is also obligated to
actively improve air quality.  Currently, approximately one half of the
Commonwealth’s citizens live in areas that do not attain the national
standards.  Visibility problems have been identified in Virginia’s
Class I (national park) areas.  Additionally, nitrogen deposition from
airborne emissions is contributing to serious water quality problems in
Chesapeake Bay.  In this larger context, it is clear that the state
needs to take additional steps beyond the immediate legal requirements
for nonattainment and PSD areas if larger, statewide issues of air
quality are to be addressed.  Again, given the uncertainty surrounding
the specific impacts of the federal rule, the state rule is exercising
its responsibility to consider a somewhat more closely scrutinized
process for implementing the basic elements of NSR reform.  

Virginia has a legal obligation to incorporate the federal regulations
in a manner that will result in equal or better environmental benefit. 
In order to balance the need to meet Virginia’s specific air quality
needs with the need to improve permitting certainty and flexibility, a
number of revisions to the federal rules have been made...  

The 5-year period was selected in order to enable sources to utilize a
moderately extended lookback while providing the board assurance that no
unusually high or low periods would be selected.  A conservative
transition to the new system will assure permitting, compliance, and
enforcement reliability while allowing sources the enhanced flexibility
of an extended lookback.  Additionally, the regulation allows sources
the use of a different time period in determining baseline actual
emissions if a case can be made that the proposed alternative time
period is more representative of normal source operation.  This
provision will provide sources with additional flexibility when
appropriate, while providing the oversight necessary to monitor the
program and avoid compliance issues.”

Virginia further went on to provide additional reasoning for why a
5-year lookback period in lieu of the federal 10-year approach was
selected for the facilities in the Commonwealth.  In their revision
request submittal, Virginia further added how data was used to compare
the impacts of a 2-year, 5-year and 10-year lookback period.  This
discussion can also be found in the Attachment to this Technical Support
Document.  Thus, Virginia had chosen to limit the lookback period to 5
years, as noted above, with the possibility of extending the lookback
period past the 5 years upon Board approval.  It did not however, limit
the possibility of extending the lookback period past the 10 years
allowed in the federal regulations.   

Though it was not Virginia’s intention to exceed the 10-year lookback
limitation, EPA’s decision to propose limited approval was based the
Commonwealth’s interpretation of its regulations as provided in their
discussion, above.  Furthermore, EPA would look unfavorably upon any use
of discretion by Virginia that would allow for baselines that exceeded a
10-year lookback period.  EPA expects Virginia to correct these
definitions at 9 VAC 5-80-1615 and 9 VAC 5-80-2010 by limiting the
discretionary lookback period to 10 years.  When Virginia makes these
amendments, they will be eligible for consideration for full approval of
its NSR program.

In conclusion, the impact of Virginia’s tailored approach to NSR
Reform implementation will not be fully known until the program has been
in place for some time since implementation of some elements are left to
the discretion of the Board.  Until the Board has been given the
opportunity to exercise this discretion, EPA cannot say with certainty
that this variation from the federal rule has a measurable impact on
implementation relative to the federal program.  Therefore, EPA believed
it was appropriate that while EPA resolves the gaps in its own ability
to assess the impact of the federal rules, that Virginia be given the
opportunity to demonstrate that its program meets the overall objectives
of NSR reform in a manner that they believe is environmentally sound. 
EPA believed that the limited approval action was necessary to further
strengthen the Virginia SIP.   EPA continues to rely on the
Commonwealth’s interpretation of its regulations as noted above in
this Section, and in part, the basis for the prior limited approval.  

III.	SUMMARY OF ACTION

This rule establishes a construction permit program consistent with the
federal Clean Air Act’s Title I program and implementing regulations
at 40 CFR §51.166, “Prevention of Significant Deterioration of Air
Quality.” 9 VAC-5-Chapter 80 Article 8 is part of the State
Implementation Plan and sets forth the criteria and procedures for major
stationary sources to obtain a permit to construct, operate and/or
modify a major stationary source.

This revision simply is adding new references to include NOx as a
precursor to Ozone to comport with federal counterpart language. The
Virginia Department of Environmental Quality (VADEQ) has now submitted a
final rule 9 VAC-5-Chapter 80 Article 8 as a proposed revision to the
State Implementation Plan.

EPA is now proposing to “fully” approve the regulatory changes made
with this Revision Package A08 found at 9 VAC-5-Chapter 80 Article 8,
Sections 1615 and 1695, and as referenced above, into the Virginia SIP. 
The Commonwealth’s Regulatory SIP Revision Request Package was
submitted by the Virginia Department of Environmental Quality on June 7,
2010.  The regulations for this approval became effective in the
Commonwealth on December 31, 2008.

IV.	PROGRAM REVIEW

A.	Virginia Submittal

The Virginia SIP submittal includes new references in the
Commonwealth’s rule to include NOx as a precursor to Ozone to comport
with federal counterpart language.

B.	Public Comment on the revised Commonwealth’s rules contained in
this SIP approval– 

The Regional Administrator for the U.S. Environmental Protection Agency
was notified of the public comment period, as was each local air
pollution control agency which will be significantly affected by the
revision and is located in the affected Air Quality Control Regions.  In
addition, the District of Columbia, Maryland and Tennessee, which share
affected interstate Air Quality Control Regions with Virginia, were
notified of the public comment period.  These notifications followed the
requirements of 40 CFR Part 51.102(d)(3), (4) and (5).

No comments were received regarding this revision.

C.	Regulatory Review of Proposed SIP 

VIRGINIA REGULATIONS

9 VAC 5-80-1615  Definitions.

The following table briefly summarizes the changes to this section of
Article 8.

Subsection	Status	Description

A	Modified	Minor changes to direct reader to correct current Virginia
citation

B	No changes

	C	Modified	See below for the changes to 9 VAC5-80-1615C
“Definitions”.

Many of the definitions in the SIP had previously been revised and many
terms had been added to accommodate the NSR reform regulations in the
limited approval of the PSD Article 8 SIP which was completed in October
2008.  Virginia has now updated the text of some definitions (noted
below) which adds NOx as a precursor to O3 for PSD.  EPA has determined
that these regulatory changes are SIP approvable. The changes were made
to the Commonwealth’s regulations, in part because of a completeness
finding for Section 110(a) of the Clean Air Act for PSD program elements
needed under State infrastructure (March 27, 2008, 73 FR 16205).  

The following table summarizes the changes that have been made.  Those
terms appearing in bold text are NSR reform minimum program elements.  

Modified definitions at 9 VAC5-80-1615 C	major modification (b)	adds
reference that NOx shall be considered a precursor for Ozone

Modified definitions

at 9 VAC5-80-1615 C	major stationary source (a)(1)(x)	Changed text to
clarify meaning of fossil fuel boilers.   Regulation is consistent to
prior approved text.   

Modified definitions at 9 VAC5-80-1615 C	major stationary source (b)
adds reference that NOx shall be considered a precursor for Ozone

Modified definitions at 9 VAC5-80-1615 C	major stationary source (c)(21)
Changed text to clarify meaning of fossil fuel boilers. Regulation is
consistent to prior approved text.     

Modified definitions at 9 VAC5-80-1615 C	regulated NSR pollutant (a)
added words “and Nox” to show precursors for Ozone

Modified definitions at 9 VAC5-80-1615 C	Significant ( a) (Ozone
criteria in pollutant chart)	added words “and Nox” to show
precursors for Ozone

9 VAC 5-80-1695.  Exemptions.

The following table describes how the section has been changed.  

Subsection in 1695	Changes

A	Changed text to clarify meaning of fossil fuel boilers.  Regulation is
consistent to prior approved text.   

B	No changes.

C	No changes.

D	No changes.

E	Modified Section E. 1. No de minimus air quality level is provided for
Ozone. However, any net increase of VOCs or NOx  subject to Article 8
would be required to perform an ambient impact analysis including
gathering ambient air quality data. 

V.       INFRASTRUCTURE 

Virginia’s proposed SIP submission addresses changes needed in the
part C PSD permit program.  This SIP submission also corrects
deficiencies identified by EPA in the March 27, 2008 Federal Register
notice entitled, “Completeness Findings for Section 110(a) State
implementation Plans for the 8 hour Ozone National Ambient Air Quality
Standards (1997 Ozone NAAQS)”, (73 FR 16205).  EPA’s proposed
approval of this SIP submission addresses Virginia’s  compliance with
the portion of CAA Section 110 (a)(2)(C) & (J) relating to the Part C
permit program for the 1997 NAAQS Ozone NAAQS, because this proposed
approval would approve regulating  NOx as a precursor to Ozone in
Virginia’s  SIP in accordance with the Federal Register notice dated
November 29, 2005 (70 FR 71612) that finalized NOx as a precursor for
Ozone regulations set forth at 40 CFR 51.166 and in 40 CFR 52.21.  

VI.	RECOMMENDED AGENCY ACTION

EPA recommends “fully” approving the Virginia Regulatory Revision
Package as a current revision to the Virginia SIP at 9 VAC-5-Chapter 80
Article 8 Permits for Major Stationary Sources and Major Modifications
Locating in PSD Areas. This SIP revision will establish NOx as a
precursor to Ozone and will not supersede the previous “limited
approval” status of those citations as noted in 73 FR 62897; and as
previously discussed in Section II of this document. 

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