BOARD MEETING DATE: November 5, 2010
AGENDA NO. 36

PROPOSAL:

Adopt Proposed Rule 1714 - Prevention of Significant Deterioration for Greenhouse Gases, and Amend Regulation XXX –Title V Permits

SYNOPSIS:

On June 3, 2010, U.S. EPA promulgated a “tailoring rule” establishing BACT and permitting requirements for greenhouse gas (GHG) emissions under Prevention of Significant Deterioration (PSD), and Title V programs. U.S. EPA proposed a phased approach to the regulation and permitting of GHG sources. Staff is proposing a new rule for PSD for GHGs (PR 1714), and amendments to Title V (Regulation XXX) programs to implement the federal provisions.

COMMITTEE:

Stationary Source, September 24, 2010, and October 15, 2010, Reviewed

RECOMMENDED ACTION:

Adopt the attached resolution:

1. Certifying the Notice of Exemption for Proposed Rule 1714 – Prevention of Significant Deterioration for Greenhouse Gases, and Proposed Amended Regulation XXX – Title V Permits; and

2. Adopting Rule 1714 – Prevention of Significant Deterioration for Greenhouse Gases, and Amending Regulation XXX – Title V Permits.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

The District staff is proposing to amend Regulations XVII – Prevention of Significant Deterioration (PSD), and XXX – Title V Permits, to implement federally mandated requirements for greenhouse gases (GHG) for the PSD and Title V programs. These federal programs are implemented by the District through the enforcement of these two regulations. Regulation XVII amendments will incorporate federal requirements for GHGs by reference into a new rule, Rule 1714 – PSD for GHGs. Regulation XXX amendments would add federal GHG requirements into the current District rules.

U.S. EPA promulgated regulations regarding stationary source permitting and BACT requirements for GHGs which was necessary because of EPA’s action in response to Massachusetts vs. EPA 549 U.S. 497 (2007). On April 2, 2007, the U.S. Supreme Court found that GHGs are air pollutants under CAA section 302(g). As a result, the Supreme Court found that EPA was required to determine, under CAA section 202(a) whether (1) GHGs from new motor vehicles cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare, or (2) the science is too uncertain to make a reasoned decision. After issuing a proposal and receiving public comment, the EPA Administrator signed two distinct findings regarding GHGs under CAA section 202(a) on December 7, 2009: Endangerment Finding and Cause or Contribute Findings. Because these findings were made under the Clean Air Act, stationary sources are then subject to regulation for GHGs as air pollutants. U.S. EPA published a GHG tailoring rule on June 3, 2010 (75 FR31514) to establish reasonable thresholds for Title V and PSD for GHGs.

The PSD program is a federal preconstruction review and permitting program (40 CFR Part 52) for attainment and unclassified air contaminants applicable to major stationary sources and major modifications. The District currently has partial delegation to implement this program through Regulation XVII – PSD.

Title V is a federal operating permit program, 40 CFR Part 70, implemented by state and local agencies. The District implements federal Title V requirements through Regulation XXX – Title V Permits, which has been approved by U.S. EPA but is not in the SIP. 

Regulation Proposal

The proposed adoption of PR 1714 – PSD for GHGs, and amendments to XXX - Title V Permits, are necessary to implement federal changes published June 3, 2010 and effective August 2, 2010. The first phase-in date for implementation of requirements is January 2, 2011, followed by a second step implementation date of July 1, 2011. The proposed amended rules reflect these time-frames.

Regulation XVII – Prevention of Significant Deterioration

There is one new rule proposed for adoption in Regulation XVII - PSD, PR 1714 – PSD for GHGs. This rule adopts by reference 40 CFR Part 52.21, the federal requirements for the PSD program, and specifically exempts those sections of the federal regulation that are not applicable to GHGs. Thus, PSD will include BACT for GHGs, once it is developed by the U.S. EPA, or as determined by AQMD on a case-by-case basis, and public notification and participation.

The thresholds are as follows:

Step 1, as of January 2, 2011 – source already subject to the PSD regulation for new construction or a modification for any attainment pollutant, and having an increase in GHG emissions on a carbon dioxide equivalent (CO₂e) basis (Global Warming Potential [GWP] applied) >75,000 tpy CO₂e and with a net emission increase greater than zero of GHG emissions on a mass basis (no GWP applied), will be required to undergo assessment of BACT for GHG emissions.

Step 2, as of July 1, 2011 - all sources subject to the regulation through Step 1 will continue to be subject to the rules and additionally, sources with a potential to emit (PTE) GHGs >100,000 tpy CO₂e and emitting GHGs or an NSR pollutant above the 100/250 tpy (mass based) statutory thresholds, will be subject to the regulation. Furthermore, on or after the July 1, 2011 date, modifications of a “major source”, including those determined to be a major source solely on the basis of GHG emissions, with a net emissions increase of GHGs of >75,000 CO₂e (GWP applied), and a net increase in GHGs calculated on a mass basis (no GWP applied) equal to or exceeding 0 tpy, will be subject to the regulation. These facilities will be subject to BACT for GHGs. The U.S. EPA regulation also states that sources emitting <50,000 tpy CO₂e would not be subject to the regulation until at least April 30, 2016. Additional federal rulemaking would be necessary to regulate such sources.

Regulation XXX – Title V Permits

Amendments to Regulation XXX are proposed for seven of the nine rules in the regulation. PAR 3000 – General, is proposed for amendment by adding three definitions. PAR 3001 – Applicability, is proposed to be amended by adding the January 2, 2011 and July 1, 2011 dates for including GHGs in Title V permits. PAR 3002 – Requirements, is proposed to be amended by adding the phase-in dates and threshold levels. PAR 3003 – Applications, PAR3005 – Permit Revisions, and PAR3006 – Public Participation, are proposed for amendment only due to references in those rules to definitions in PAR 3000 – General, and the proposed changes in the numbering sequence in that rule. Proposed Amended Rule 3008 – Potential to Emit Limitations, authorizes sources to cap their PTE to avoid applicability of Title V based solely on GHG emissions.

Currently, the District has issued approximately 500 active Title V permits. Staff has identified 55 existing facilities which may potentially be impacted by the Title V federal regulations. These facilities are primarily classified in the following industries: cement, cogeneration units, electric power generation, hydrogen plant, inorganic chemical manufacturing, and petroleum refineries. This information is based on GHG emissions reported to CARB for 2008. Staff is not able to estimate the number of facilities that may be subject to PSD.

Public Process

A public workshop was held on September 9, 2010. Comments received through the close of comments September 17, 2010 are addressed in the draft Staff Report (See Response to Comments). A public consultation meeting was held October 12, 2010. EPA and ARB staff reviewed the draft rules and provided informal comments.

CEQA and Socioeconomic Impacts

SCAQMD staff has reviewed the Proposed Rule 1714 – PSD for Greenhouse Gases, and the proposed amendments to Regulation XXX – Title V Permits, and determined them to be exempt from CEQA requirements pursuant to State CEQA Guidelines §15268 – Ministerial Projects. A Notice of Exemption will be filed with the county clerks immediately following adoption of the proposed project.

AQMP and Legal Mandates

The District is adopting PR 1714 – PSD for GHGs, and amending PAReg XXX – Title V Permits, to implement the federal requirements for GHGs. These federal requirements are not included in the AQMP, but are federal requirements under the Clean Air Act, and upon adoption will be forwarded to CARB and U.S. EPA for approval, and in the case of Rule 1714, for inclusion in the SIP.

Implementation Plan

The proposed amendments do not materially affect the structure or function of existing programs associated with the implementation of Regulations XVII – Prevention of Significant Deterioration, and XXX – Title V Permits, or any other AQMD rules. Staff is available to assist facilities covered by the proposed amendments.

Resource Impacts

Current AQMD resources are expected to be sufficient to implement and enforce Proposed Rule 1714 – Prevention of Significant Deterioration for Greenhouse Gases, and Proposed Amended Regulation XXX – Title V Permits.

Attachments (ZIP, 323k)

1. Summary of Proposal

2. Key Issues and Responses

3. Rule Development Process

4. Key Contacts List

5. Resolution

6. Proposed Amended Rule Language

7. Final Staff Report

8. NOE