IMPERIAL COUNTY AIR POLLUTION CONTROL DISTRICT STAFF REPORT

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1 I. EXECUTIVE SUMMARY The Prevention of Significant Deterioration (PSD) permit program was developed by the United States Congress to prevent significant environmental impacts on attainment or unclassified areas from major industrial sources of air pollution. Attainment areas are regions where air quality meets the NAAQS for criteria pollutants established by the federal Clean Air Act. The PSD federal permitting program applies to new major stationary sources and significant modifications to existing major facilities. The PSD permitting program is a pre-construction permit that is currently administered by EPA Region 9. The District is not delegated to implement the PSD program. However, under current regulations, major facilities are required to obtain a Title V permit from the District. The PSD permitting requirements are ultimately incorporated into the Title V permit. There is currently only one PSD permit in Imperial County; held by Mesquite Lake Resource Recovery Plant. The EPA has recently issued regulations requiring a PSD permit for major stationary sources or modification to major stationary sources of greenhouse gases. This action could possibly have a significant increase in PSD permit applications throughout the state. The EPA staff could be overwhelmed with these new permit applications and the delay in processing them could be two years or more. EPA is encouraging local air districts to take on PSD permitting responsibility; therefore, the District needs to adopt a PSD permitting rule that mirrors the federal requirements and have that rule approved by ARB and EPA for incorporation into the State Implementation Plan (SIP). By taking over the responsibility of issuing PSD permits, the District will be able to issue PSD permits in a much shorter time and in case that a PSD permit is appealed, the issues can be heard by the District s Hearing Board rather than an EPA office in Washington. The District proposes to take on PSD responsibility by adopting a rule that incorporates the federal PSD requirements by reference. CAPCOA has developed a model rule in conjunction with EPA and ARB staff. The District staff is proposing that the Air Board adopt this CAPCOA model rule with various options in the model rule tailored to the District s specifics. II. BACKGROUND The federal PSD permitting program is a Clean Air Act permitting program for new and modified major sources of air pollution. The specific requirements of the federal PSD program are detailed in 40 Code of Federal Regulations (CFR) Par PSD applies to all pollutants that do not exceed the National Ambient Air Quality Standards (NAAQS) in an area. The NAAQS establish maximum pollution concentration levels to protect public health and welfare from harmful level of pollutants. Air pollutants covered by the NAAQS are the criteria pollutants. PSD also applies to other pollutants that do Draft Newly Proposed Rule 904-Prevention of Significant Deterioration (PSD) Program Page 1

2 not have a NAAQS. Currently in Imperial County, the PSD pollutants include Carbon Monoxide, Nitrogen Dioxide, Sulfur Dioxide, Lead, Fluorides, Sulfur acid mist, total reduced sulfur, reduced sulfur compounds, Greenhouse Gases (GHGs), and other industry specific pollutants, such as those from Municipal Waste Combustors On April 7, 2007, the U.S. Supreme Court found that GHGs are air pollutants covered by the federal Clean Air Act (CAA) and later on December 9, 2009, EPA s Administrator made the finding that six key GHGs in the atmosphere threaten the public health and welfare of current and future generations. EPA s Administrator also found that the combined emissions of these well-mixed gases from new motor vehicles engines contribute to the greenhouse gas pollution which threatens public health and welfare. By determining that GHG emissions from mobile sources contribute or cause air pollution that endanger public health or welfare, EPA also established that it is required to regulate GHG emissions from stationary sources. On May 13, 2010, EPA issued regulations under the CAA to require permitting of major stationary sources of greenhouse gases. These regulations trigger CAA permitting requirements under federal PSD program for GHG emissions. A PSD permit is a legal document that limits the amount of air pollution that may be released by a source (i.e., a plant or facility). A PSD permit is required before a major new source constructs, or before changes or modifications that are major or significant are made at an existing major source or air pollution. The permit may be issued by EPA or a designated permitting authority that has been delegated authority by EPA to issue the PSD permit. The permit specifies what construction is allowed, what emission limits must be met, and often how the equipment that is producing the air pollution must be operated. The PSD program applies to a new facility that will have major and significant amounts of air pollution for any criteria pollutants. It also applies to existing sources that plans to modify its operations such that the modification leads to increases of air pollution that will be major or significant. A major source is a facility that emits 250 tons per year of an applicable pollutant, except for GHGs which the facility must emit 100,000 tons per years in terms of Carbon Dioxide equivalent units(co2e). There are 28 listed source categories where a major source is defined as 100 tons per year of an applicable pollutant, whit the exception of GHGs. A significant modification refers to thresholds assigned to each criteria pollutant and certain non-criteria pollutants (e.g., the significance threshold is 40 tpy for NOx or Sulfur Dioxide, 100 tpy for CO, 0.6 tpy of Lead, or 75,000 tpy of GHGs). There are two main requirements to be met before a PSD permit is issued; Best Available Control Technology (BACT) is employed, and an air quality impact analysis is conducted showing that the emissions increase from the source will not cause or Draft Newly Proposed Rule 904-Prevention of Significant Deterioration (PSD) Program Page 2

3 contribute to an exceedance of an NAAQS or impact Class I areas 1, such as National Parks. BACT must be employed on each emissions unit that emits an applicable air pollutant in excess of the significant modification threshold for that pollutant. Because GHGs are a newly regulated pollutant, BACT for GHG has not been thoroughly developed. The most likely PSD source of GHGs would be a fossil-fueled boiler of about 200 million Btu/hr or more operating full time. In this case, BACT would likely result in a fuel efficiency requirement in order to minimize Carbon Dioxide emissions. The main purpose of the air quality analysis is to demonstrate that new air pollution which will be emitted from a proposed major stationary source or major modification, in conjunction with other applicable emissions increases and decreases from existing sources, will not cause or contribute to an exceedance of any applicable NAAQS or PSD increment (PSD increment is the amount of pollution an area is allowed to increase. PSD increments prevent the air quality in clean areas from deteriorating to the level se by the NAAQS). Generally, the air quality analysis will involve (1) an assessment of existing air quality, which may include ambient monitoring data and air quality dispersion modeling results, and (2) predictions, using dispersion modeling, of ambient concentrations what will result from the applicant s proposed project and future growth associated with the project. The EPA has not established a NAAQS or ambient air increment for GHGs, therefore an air quality impact analysis is not required for GHGs. Rule 904 exempts the applicant from the air quality analysis for GHGs. According to EPA, a perfect application and a complete non-controversial permit should take approximately 6 months from receipt of the application to issuance of the final PSD permit. However, it is extremely rare for a PSD permit to be issued within this timeframe. It is more typical for the PSD process to take two or more years from the date of receipt of the application for the permit to be issued. If the District were to have PSD delegation authority, the permitting process time would likely be much shorter. In the event that any PSD permit issued by EPA is appealed, the appeal is heard by the federal Environmental Appeals Board in Washington, DC. While, any appeals concerning a PSD permit issued by the District would be heard by the local District 1 EPA designates areas based on the degree to which the natural habitat requires protection. Class I areas are assigned the most stringent growth increments. These are areas of special national or regional natural, scenic, recreational, or historic value. In addition to the growth increments, when a project is predicted to impact a Class I area, the Federal Land Manager for that area determines whether the project will have an unacceptable impact on air quality related values. Draft Newly Proposed Rule 904-Prevention of Significant Deterioration (PSD) Program Page 3

4 Hearing Board. Therefore, the appeals are handled locally with more scheduling flexibility and it could be less costly and faster to be resolved. III. CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) The EPA is currently implementing the PSD program; major sources or modifications of major sources of attainment pollutants are currently required to obtain a PSD permit. Therefore, the permitting requirements will remain unchanged whether EPA or the District issues the PSD permit. District staff finds that the proposed adoption or Rule 904 is exempt from the California Environmental Quality Act as an action by the regulatory agency for protection of the environment (Class 8 Categorical Exemption, Section 15308, State CEQA Guidelines), and because it can be seen with certainty that there is no possibility that the activity in question may have a significant adverse effect on the environment (Section 15061(b)(3), State CEQA Guidelines). The California Public Resources Code, Section 21159, requires District s to perform at the time of the adoption of a rule or regulation requiring the installation of pollution control equipment, or a performance standard, or treatment requirement, an environmental analysis of the reasonably foreseeable methods of compliance. Compliance with the requirement of a PSD permit issued by the District will reduce emissions from sources and will not cause any significant adverse impact on the environment. Therefore, District staff has concluded that no adverse environmental impact will be caused by compliance with the proposed rule. IV. RULE DEVELOPMENT PROCESS ON XXXX XX, 2011, the ICAPCD held a meeting with U.S. EPA and CARB representatives via teleconference, to discuss the development of Rule 904, Prevention of Significant Deterioration (PSD) Program. The District proposes to take on PSD responsibility by adopting a rule that incorporates the federal PSD requirements by reference. The EPA recommended that the District adopt the PSD CAPCOA model rule that was developed in conjunction with EPA and ARB staff. The ICAPCD conducted a public workshop to collect comments on the newly proposed rule at the ICAPCD s office in El Centro, California. The workshop was held on XXXX XX, Comments provided by the public during the workshop were incorporated into the newly proposed rule as appropriate. A Public notice for a public hearing inviting the community to review and comment on the newly proposed rule was published in the Imperial County local newspaper of Draft Newly Proposed Rule 904-Prevention of Significant Deterioration (PSD) Program Page 4

5 greatest circulation, the Imperial Valley Press, on XXXX XX, 2011 and the ICAPCD website. V. RECOMMENDATIONS A. APCD ADVISORY BOARD The Air Pollution Control District Advisory Board met to discuss the newly proposed Rule on XXXX XX, The APCD Advisory Board recommended the approval of the newly proposed and amended rules, the staff report, its findings and appendices. B. STAFF RECOMMENDATION ICAPCD staff recommends the adoption of the newly proposed Rule 904, Prevention of Significant Deterioration (PSD) Program. Rule 904 requires major sources and significant modifications to major sources of attainment pollutants to comply with the federal PSD program by adopting by reference the requirements detailed in 40 Code of Federal Regulations (CFR) Par After considering public comments at today s hearing, District staff recommends that this Air Board determine that the adoption of Rule 904 is exempt from CEQA and adopt this rule for inclusion in the Imperial County s State Implementation Plan (SIP). VI. DECLARATION OF FINDING The Imperial County Air Pollution Control District Board hereby finds as follows: The adoption of the newly proposed rule for the Imperial County, is considered a project within the meaning of Section of the California Environmental Quality Act (CEQA). The adoption of the staff report, its findings and appendices are exempt from the requirements of Public Resources Code Section et seq. under the CEQA Guidelines, in the California Code of Regulations Section (b)(3). The ICAPCD is a regulatory agency and the public agency with the principle responsibility for carrying out projects related to air pollution and the control thereof. Clean air is a valuable and essential natural resource. The newly proposed rule will serve to reduce the amount of attainment air pollutants introduced into the ambient air. Draft Newly Proposed Rule 904-Prevention of Significant Deterioration (PSD) Program Page 5

6 The adoption of the newly proposed rule will serve to enhance and protect the environment by controlling air pollutant sources of attainment pollutants. There has been no evidence presented to suggest that the implementation of the newly proposed rule, the staff report, its findings or appendices will have an adverse effect on the environment. There has been no evidence presented to suggest that the implementation of the newly proposed rule, the staff report, its findings and appendices will lead to or result in cumulative adverse impacts. Health and Safety Code provides the authority to the ICACPD to enact and adopt the newly proposed Rule. The requirements of the newly proposed rule, the staff report, its findings and appendices are clear and capable of being understood by those persons directly affected by it. The newly proposed rules, the staff report, it s findings and appendices do not conflict with or contradict any existing statute, court decision, or state or federal regulation. The requirements of the newly proposed rule, the staff report, its findings and appendices are not duplicative of any existing state or federal regulation. The newly proposed rule, the staff report, it s findings and appendices described herein will not significantly affect air quality or emissions limitations and therefore is exempt from California Health and Safety Code section (d), which requires a socioeconomic impact analysis of the proposed action to be performed. The Imperial County has a population of less than 500,000 people. Draft Newly Proposed Rule 904-Prevention of Significant Deterioration (PSD) Program Page 6