BOARD MEETING DATE: February 7, 2003
AGENDA NO. 29

Authorize the Executive Officer to Seek Equivalency from U.S. EPA Regarding Recent Revised Regulations Governing Prevention of Significant Deterioration; and If Not Granted, Terminate PSD Delegation Agreement

SYNOPSIS: 

On December 31, 2002, U.S. EPA published final revised regulations governing the NSR programs mandated by Part C and D of Title I of the Clean Air Act for attainment and non-attainment areas, respectively. AQMD has a deadline of March 3, 2003, to receive new delegation from U.S. EPA to implement the revised regulations for Prevention of Significant Deterioration (PSD) for attainment pollutants, namely NO2 and SO2. This action proposes to authorize the Executive Officer to request from U.S. EPA to recognize AQMD’s Regulation XVII – PSD to be as stringent as, and therefore equivalent to, U.S. EPA’s revised regulations. This action also proposes that in case U.S. EPA does not find AQMD’s Regulation XVII – PSD equivalent to their revised PSD regulations, to authorize the Executive Officer to not request any further delegation and allow U.S. EPA to terminate AQMD’s PSD delegation agreement and become the permitting agency for PSD sources in the South Coast district

COMMITTEE: 

Not Applicable

RECOMMENDED ACTION:

1. Authorize the Executive Officer to request from U.S. EPA recognition that AQMD’s Regulation XVII – PSD is as stringent, and therefore equivalent to, the U.S. EPA’s revised PSD regulations published in the Federal Register on December 31, 2002.
   
   
2. Authorize the Executive Officer, in the event that U.S. EPA does not find AQMD’s Regulation XVII – PSD to be equivalent to their revised PSD regulations, to not request any further delegation and allow U.S.  EPA to terminate AQMD’s PSD delegation agreement and become the permitting agency for PSD sources in AQMD.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

The federal Clean Air Act, Title I, Part C and U.S. EPA regulations 40 CFR Part 52.21 require that areas meeting National Ambient Air Quality Standards (NAAQS) for any criteria pollutant (i.e. “attainment” areas) have a major source NSR program called Prevention of Significant Deterioration (PSD).  AQMD adopted Regulation XVII – PSD in October 1988 (subsequently amended in January 1989 and August 1999) to implement the requirements of the federal PSD program.  In January 1997, U.S. EPA signed a delegation agreement (“Delegation”) with AQMD to agree to the delegation of authority, from U.S. EPA to AQMD for the implementation of the provisions of the federal PSD program (40 CFR Part 52.21).  As part of that Delegation U.S. EPA also determined that AQMD Regulation XVII generally met the requirements of PSD program; and that therefore permits issued by AQMD in accordance with Regulation XVII will be deemed to meet federal PSD permit requirements pursuant to the provisions of the Delegation.

In July 1996, U.S. EPA proposed revisions to the NSR rules (both PSD and non-attainment NSR).  Subsequently, on December 31, 2002, U.S. EPA published revised NSR rules in the final form for both PSD and non-attainment NSR programs and made them mandatory.  The final revisions mainly impact applicability determinations for modifications and include changes to emission calculations for Baseline Emission Determinations and Actual Emissions-to-Future Actual Emissions Methodology, as well as other changes for Plantwide Applicability Determinations, Clean Units and Pollution Control Projects.  At the same time in December 2002, U.S. EPA also published some “proposed” changes to the NSR rules for Routine Maintenance, Repair and Replacement, on which U.S. EPA is soliciting comments before making them final rules.  Presently, the South Coast area meets NO2, SO2 and lead (Pb) NAAQS, and therefore is designated as being in attainment of the federal standards for all three of those criteria pollutants.

In its December 31, 2002 final rules for the PSD program, U.S. EPA has included a final date of March 3, 2003 (i.e. 60 days after final rules publication date of December 31, 2002) for permitting agencies to implement the revised PSD rules.  U.S. EPA Region IX has now informed us that our Delegation and Regulation XVII do not authorize AQMD to implement the revised PSD rules.  Therefore, AQMD needs to either seek a new delegation agreement to implement the revised PSD rules either directly or through amendments to Regulation XVII or U.S. EPA will terminate our PSD Delegation at which time U.S. EPA will be responsible to issue PSD permits to PSD sources in AQMD.

Proposal

U.S. EPA’s final NSR rule revisions make it mandatory to implement the final revisions for PSD by March 3, 2003 and for non-attainment NSR by January 1, 2006, respectively.  The U.S. EPA’s earlier proposal in 1996 was only proposing to make these changes voluntary and not mandatory.  The final revisions include a number of elements that tend to relax the applicability requirements, and therefore, allow some major modifications to large sources, with potentially significant emission increases to not be subject to the federal NSR program.  In response, a number of individual states, as well as organizations such as State and Territorial Air Pollution Program Administrators and Association of Local Air Pollution Control Officials (STAPPA/ALAPCO) and California Air Pollution Control Officers Association (CAPCOA) have expressed their serious concerns about the revisions and some states have sued U.S. EPA on the changes.  The Board has also authorized AQMD to sue to challenge these rules.

The federal Clean Air Act also allows a state or local permitting agency to implement a different NSR program as long as such program is as stringent or more stringent than the federal NSR program.  AQMD believes that Regulation XVII – PSD is as stringent or more stringent than the U.S. EPA’s revised PSD rules.  Therefore, this proposal is to ask the Board to direct the Executive Officer to request from U.S. EPA Region IX recognition that AQMD’s Regulation XVII – PSD is as stringent as, and grant AQMD equivalency with the revised federal PSD rules (40 CFR part 52.21).  This request is being made with the notation that although AQMD is in attainment for both NO2 and SO2, staff still considers NO2 as a precursor to ozone and both NO2 and SO2 as precursors to PM10, and as a result treat them the same as non-attainment pollutants under the nonattainment NSR Rules and Regulations.

This proposal is also requesting the Board to authorize the Executive Officer, in the case that U.S. EPA does not grant equivalency to AQMD’s Regulation XVII, to not request any further delegation to implement the revised federal PSD rules directly and allow U.S. EPA to terminate AQMD’s PSD Delegation.  Through this latter action, the U.S. EPA will become the responsible agency for issuance of future PSD permits for PSD sources in AQMD.  AQMD will still issue the NSR permits for these sources.  The AQMD staff does not recommend that AQMD amend its Regulation XVII to match the revised federal PSD rules, since this may result in adverse environmental impacts resulting from certain major source modifications with potentially significant emission increases not being subject to AQMD’s PSD Regulations; this action could also have adverse environmental justice implications at a time when AQMD is implementing significant enhancements to its environmental justice program.  Allowing U.S. EPA to implement the PSD program directly will also allow time to address pending and potential litigations and to clarify some of the confusion surrounding these rule changes.

Recommendations

Based on the above discussion and the upcoming deadline of March 3, 2003 imposed on AQMD by U.S. EPA for the implementation of the revised PSD rules, it is recommended that the AQMD Governing Board :

1. Authorize the Executive Officer to request from U.S. EPA to recognition that AQMD’s Regulation XVII – PSD is as stringent, and therefore equivalent to, the U.S. EPA’s revised PSD regulations published in the Federal Register on December 31, 2002
   
   
2. Authorize the Executive Officer, in the event U.S. EPA does not find AQMD’s Regulation XVII – PSD to be equivalent to their revised PSD regulations, to not request any further delegation and allow U.S. EPA to terminate AQMD’s PSD delegation and become the permitting agency for PSD sources in AQMD.

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