Approval of Air Plans; California; Multiple Districts; Prevention of Significant Deterioration

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Proposed rule.

SUMMARY:

The EPA is proposing approval of five permitting rules submitted for inclusion in the California State Implementation Plan (SIP). The State of California (State) is required under the Clean Air Act (CAA or Act) to adopt and implement a SIP-approved Prevention of Significant Deterioration (PSD) permit program. This SIP revision proposes to incorporate PSD rules for five local California air districts into the SIP to establish a PSD permit program for pre-construction review of certain new and modified major stationary sources in attainment and unclassifiable areas. The local air districts with PSD rules that are the subject of this proposal are the Feather River Air Quality Management District (Feather River or FRAQMD), Great Basin Unified Air Pollution Control District (Great Basin or GBUAPCD), Butte County Air Quality Management District (Butte or BCAQMD), Santa Barbara County Air Pollution Control District (Santa Barbara or SBAPCD), and San Luis Obispo County Air Pollution Control District (San Luis Obispo or SLOAPCD)—collectively, the Districts. We are soliciting public comment on this proposal and plan to follow with a final action after consideration of comments received.

DATES:

Any comments must be submitted no later than August 24, 2015.

ADDRESSES:

Submit comments, identified by docket number EPA-R09-OAR-2015-0257, by one of the following methods:

1. Federal eRulemaking Portal: www.regulations.gov. Follow the online instructions.

2. Email: R9airpermits@epa.gov.

3. Mail or deliver: Lisa Beckham (Air-3), U.S. Environmental Protection Agency Region IX, 75 Hawthorne Street, San Francisco, CA 94105-3901.

Instructions: All comments will be included in the public docket without change and may be made available online at www.regulations.gov , including any personal information provided, unless the comment includes Confidential Business Information (CBI) or other information the disclosure of which is restricted by statute. Information that you consider CBI or otherwise protected should be clearly identified as such and should not be submitted through www.regulations.gov or email. www.regulations.gov is an “anonymous access” system, and the EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send email directly to the EPA, your email address will be automatically captured and included as part of the public comment. If the EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, the EPA may not be able to consider your comment.

Docket: The index to the docket for this proposed action is available electronically at www.regulations.gov,, docket number EPA-R09-OAR-2015-0257, and in hard copy at EPA Region IX, 75 Hawthorne Street, San Francisco, California. While all documents in the docket are listed in the index, some information may be publicly available only at the hard copy location (e.g., copyrighted material), and some may not be publicly available in either location (e.g., CBI). To inspect the hard copy materials, please schedule an appointment during normal business hours with the contact listed in the FOR FURTHER INFORMATION CONTACT section below. Due to building security procedures, appointments must be scheduled at least 48 hours in advance.

FOR FURTHER INFORMATION CONTACT:

Lisa Beckham, Permits Office (AIR-3), U.S. Environmental Protection Agency, Region IX, (415) 972-3811, beckham.lisa@epa.gov.

SUPPLEMENTARY INFORMATION:

Throughout this document, “we,” “us” and “our” refer to the EPA.

Table of Contents

I. The State's Submittal

A. What rules did the State submit?

B. Are there other versions of these rules?

C. What is the purpose of the submitted rules?

II. The EPA's Evaluation and Action

A. How is the EPA evaluating these rules?

B. Do the rules meet the evaluation criteria?

C. Significant impact levels and significant monitoring concentrations for PM_2.5.

D. Greenhouse Gases

E. Transfer of existing permits issued by the EPA

F. Public comment and proposed action

III. Incorporation by Reference

IV. Statutory and Executive Order Reviews

I. The State's Submittal

A. What rules did the State submit?

Table 1 identifies the rules on which we are proposing action along with the dates on which each rule was adopted by the local air district and submitted to the EPA by the California Air Resources Board (CARB). On June 1, 2015, CARB requested the withdrawal from its earlier SIP submittals of these local air district rules the portion of each rule that incorporates a specific federal PSD rule provision—40 CFR 52.21(b)(49)(v). As such, our proposed approval of these local air district rules does not include the rules' incorporation by reference of 40 CFR 52.21(b)(49)(v).

The submitted rules were found to meet the completeness criteria in 40 CFR part 51, appendix V, which must be met before formal review by the EPA.

B. Are there other versions of these rules?

There are no previous versions of the rules in Table 1 in the California SIP.

C. What is the purpose of the submitted rules?

Section 110(a) of the CAA requires states to adopt and submit regulations for the implementation, maintenance and enforcement of the primary and secondary NAAQS. Specifically, sections 110(a)(2)(C), 110(a)(2)(D)(i)(II), and 110(a)(2)(J) of the Act require such state plans to meet the applicable requirements of section 165 relating to a pre-construction permit program for the prevention of significant deterioration of air quality and visibility protection. The rules reviewed for this action are intended to implement a pre-construction PSD permit program as required by section 165 of the CAA for certain new and modified major stationary sources located in attainment and unclassifiable areas. Because the State does not currently have a SIP-approved PSD program within the Districts, the EPA is currently the PSD permitting authority within these Districts. Approval of the Districts' PSD rules into the SIP will transfer PSD permitting authority from the EPA to the Districts. The EPA would then assume the role of overseeing the Districts' PSD permitting programs, as intended by the CAA.

II. The EPA's Evaluation and Action

A. How is the EPA evaluating these rules?

The relevant statutory provisions for our review of the submitted rules include CAA sections 110(a), 110(l), and 165 and part 51, § 51.166 of title 40 of the Code of Federal Regulations (40 CFR 51.166). Section 110(a) requires, among other things, that SIP rules be enforceable, while section 110(l) precludes the EPA's approval of SIP revisions that would interfere with any applicable requirements concerning attainment and reasonable further progress. Section 165 of the CAA requires states to adopt a pre-construction permitting program for certain new and modified major stationary sources located in attainment areas and unclassifiable areas. 40 CFR 51.166 establishes the specific requirements for SIP-approved PSD permit programs that must be met to satisfy the requirements of section 165 of the CAA.

B. Do the rules meet the evaluation criteria?

With some exclusions and revisions, the Districts' PSD rules incorporate by reference the EPA's PSD permit program requirements at 40 CFR 52.21, as of particular dates. We generally consider the EPA's PSD permit program requirements at 40 CFR 52.21 to be consistent with the criteria for SIP-approved PSD permit programs in 40 CFR 51.166. However, we conducted a review of each District PSD rule to ensure that all requirements of 40 CFR 51.166 were met by each such rule. Our detailed evaluation is available as an attachment to the technical support document (TSD) for this proposed rulemaking action. We also reviewed the revisions that the Districts made to the provisions of 40 CFR 52.21 that were incorporated by reference into each rule, such as revising certain terms and definitions to reflect that the Districts, rather than the EPA, will be the PSD permitting authority. In addition, we reviewed revisions made to 40 CFR 51.166 and 40 CFR 52.21 after each District adopted its PSD rule. Please see the TSD for additional information. Based on our review of these rules, the underlying statutes and regulations, and clarifying information that the Districts provided in letters dated November 13, 2014, November 25, 2014, December 16, 2014, December 18, 2014, April 8, 2015, and April 15, 2015, we are proposing to find the SIP revision for the Districts' PSD rules acceptable under CAA sections 110(a), 110(l) and 165 and 40 CFR 51.166.

The EPA's TSD for this rulemaking action has more information about these rules, including our evaluation and recommendation to approve them into the SIP.

C. Significant Impact Levels and Significant Monitoring Concentrations for PM_2.5

On January 22, 2013, the U.S. Court of Appeals for the District of Columbia (D.C. Circuit or Court) in Sierra Club v. EPA, 705 F.3d 458, granted a request from the EPA to vacate and remand to the EPA the portions of two PSD rules (40 CFR 51.166(k)(2) and 40 CFR 52.21(k)(2)) addressing the significant impact levels (SILs) for PM_2.5 so that the EPA could voluntarily correct an error in these provisions. The D.C. Circuit also vacated the parts of these two PSD rules (40 CFR 51.166(i)(5)(i)(c) and 40 CFR 52.21(i)(5)(i)(c)) establishing a PM_2.5 significant monitoring concentration (SMC), finding that the EPA was precluded from using the PM_2.5 SMC to exempt permit applicants from the statutory requirement to compile and submit preconstruction monitoring data as part of a complete PSD application. On December 9, 2013, revisions to 40 CFR 51.166 and 52.21 were published in the Federal Register to remove the affected provisions from the PSD regulations, effective as of that date. 78 FR 73698.

As Feather River Rule 10.10 incorporates 40 CFR 52.21 by reference as in effect prior to the D.C. Circuit's decision, the rule incorporates by reference an earlier version of 40 CFR 52.21 that contains the PM_2.5 SILs and SMC provisions that were later vacated by the D.C. Circuit and removed from 40 CFR 52.21 by the EPA. Accordingly, the EPA requested clarification from Feather River concerning its interpretation of Rule 10.10 to the extent that it incorporates by reference these provisions.

Great Basin Rule 221 and Butte Rule 1107 also incorporate 40 CFR 52.21 by reference as in effect prior to January 22, 2013. While these two District PSD rules specifically exclude the PM_2.5 SILs provisions that were vacated by the D.C. Circuit, they do contain the PM_2.5 SMC provisions that were vacated by the Court and removed from 40 CFR 52.21 by the EPA. Accordingly, the EPA requested clarification from Great Basin and Butte concerning their interpretation of Rules 221 and 1107, respectively, to the extent they incorporate by reference these PM_2.5 SMC provisions.

With respect to the PM_2.5 SILs, Feather River Rule 10.10 incorporates by reference an earlier version of 40 CFR 52.21 that contained the PM_2.5 SILs provisions that were later vacated by the D.C. Circuit and removed from 40 CFR 52.21 by the EPA. 40 CFR 52.21(k)(1) requires that a source applying for a new PSD permit demonstrate that any allowable emission increases from the proposed source or modification, in conjunction with all other applicable emissions increases or reductions, will not cause or contribute to a violation of any NAAQS or any applicable increment. In the preamble to the 2010 final rule adding the 40 CFR 52.21(k)(2) provision, the EPA advised that, “notwithstanding the existence of a SIL, permitting authorities should determine when it may be appropriate to conclude that even a de minimis impact will `cause or contribute' to an air quality problem and to seek remedial action from the proposed new source or modification.” Prevention of Significant Deterioration (PSD) for Particulate Matter Less than 2.5 Micrometers (PM_2.5)—Increments, Significant Impact levels (SILs) and Significant Monitoring Concentration (SMC), 75 FR 64,864, 64,892 (Oct. 20, 2010). In another passage of the preamble, the EPA also observed that “the use of a SIL may not be appropriate when a substantial portion of any NAAQS or increment is known to be consumed.” Id. at 64,894. The D.C. Circuit's decision in Sierra Club v. EPA held that, contrary to these statements in the preamble, the text of the (k)(2) provision “does not give permitting authorities sufficient discretion to require a cumulative air quality analysis” under such circumstances. 705 F.3d at 464.

Consistent with the Court's decision in Sierra Club v. EPA and the statements by the EPA in the preamble to the 2010 final rule that are discussed above, Feather River affirmed in a letter dated December 18, 2014 that it does not interpret § 52.21(k)(2), as incorporated by reference in Rule 10.10, to preclude FRAQMD from exercising discretion to determine when it may be appropriate to conclude that an impact below the PM_2.5 SIL values in § 52.21(k)(2) will cause or contribute to an air quality problem and to seek remedial action from the proposed new source or modification. Such discretion is necessary to ensure adherence to the requirement of the Clean Air Act that a PSD project not cause or contribute to a violation of any NAAQS or any applicable increment. Based on this interpretation, the District affirmed in the December 18, 2014 letter that it will not read § 52.21(k)(2), as incorporated by reference in District Rule 10.10, as an absolute “safe harbor,” but will exercise discretion to determine whether a particular application of the PM_2.5 SIL values is appropriate when a substantial portion of the PM_2.5 NAAQS or increment is known to be consumed. The District confirmed that it retains the discretion to require additional information from a permit applicant as needed to assure that the source will not cause or contribute to a violation of any NAAQS or applicable increment pursuant to § 52.21(k)(1).

As noted above, Feather River Rule 10.10, Great Basin Rule 221, and Butte Rule 1107 also incorporated by reference an earlier version of the federal regulation at § 52.21(i)(5)(i) that contains the PM_2.5 SMC, which provides that each District may exempt a proposed major stationary source or major modification from the requirements of paragraph (m) of this section, with respect to monitoring for a particular pollutant, if the emissions increase or net emissions increase is below the applicable SMC. Feather River, Butte, and Great Basin confirmed in their letters dated December 18, 2014, April 8, 2015, and April 15, 2015 that this provision, specifically at § 52.21(i)(5)(i)(c), as incorporated into each rule, provides the Districts with the discretion to determine whether it is appropriate to apply the SMC for PM_2.5 to exempt a permit applicant from the requirement to compile and submit preconstruction ambient monitoring data for PM_2.5 as part of a complete PSD application. Consistent with the D.C. Circuit's decision in Sierra Club v. EPA vacating the PM_2.5 SMC, the Districts affirmed in their letters dated December 18, 2014, April 8, 2015, and April 15, 2015 that they will not exercise their discretionary authority to use the PM_2.5 SMC in order to exempt PSD permit applicants from the requirement in Clean Air Act section 165(e)(2) that ambient monitoring data for PM_2.5 be included in applications subject to the PSD program for PM_2.5. Accordingly, the Districts' APCOs will require all applicants requesting a PSD permit from the District to submit ambient PM_2.5 monitoring data in accordance with Clean Air Act requirements when proposed increases of direct PM_2.5 emissions or any emissions of a PM_2.5 precursor equal or exceed a significant amount.

In summary, Feather River has clarified and confirmed that it intends to implement its PSD program with respect to the PM_2.5 SILs consistent with the Sierra Club Court's decision. In addition, Feather River, Great Basin, and Butte have clarified and confirmed that they intend to implement their PSD programs with respect to the PM_2.5 SMC consistent with the Sierra Club Court's decision. Upon review of the Districts' PSD rules and the clarifications provided by the Districts, we find that the PSD SIP submittals including the PM_2.5 SILs and SMC language are approvable and consistent with the Act and the requirements for a PSD program.

D. Greenhouse Gases

The PSD permitting requirements applied to greenhouse gases (GHGs) for the first time on January 2, 2011. 75 FR 17004 (Apr. 2, 2010). On June 3, 2010, the EPA issued a final rule, known as the Tailoring Rule, which phased in permitting requirements for GHG emissions from stationary sources under the CAA PSD and title V permitting programs. 75 FR 31514. Under its understanding of the CAA at the time, the EPA believed the Tailoring Rule was necessary to avoid a sudden and unmanageable increase in the number of sources that would be required to obtain PSD and Title V permits under the CAA because the sources emitted GHG emissions over applicable major source and major modification thresholds. In Step 1 of the Tailoring Rule, which began on January 2, 2011, the EPA limited application of PSD requirements to sources of GHG emissions only if the sources were subject to PSD “anyway” due to their emissions of pollutants other than GHGs. These sources are referred to as “anyway sources.” In Step 2 of the Tailoring Rule, which began on July 1, 2011, the EPA applied the PSD requirements under the CAA to sources that were then-classified as major, and, thus, required to obtain a permit, based solely on their potential GHG emissions and to modifications of otherwise major sources that required a PSD permit because they increased only GHG emissions above applicable levels in the EPA regulations.

On June 23, 2014, the Supreme Court issued a decision in Utility Air Regulatory Group (UARG) v. Environmental Protection Agency, 134 S. Ct. 2427, 189 L. Ed. 2d 372 (2014), holding that the EPA may not treat GHGs as an air pollutant for purposes of determining whether a source is a major source (or a modification thereof) required to obtain a PSD permit. The Supreme Court's decision also said that the EPA could continue to require that PSD permits, otherwise required based on emissions of pollutants other than GHGs, contain limitations on GHG emissions based on the application of BACT. The Supreme Court decision effectively upheld PSD permitting requirements for GHG emissions under Step 1 of the Tailoring Rule for “anyway sources” and invalidated PSD permitting requirements for GHG emissions for Step 2 sources. In accordance with the Supreme Court decision, on April 10, 2015, the D.C. Circuit issued an amended judgment vacating the regulations that implemented Step 2 of the Tailoring Rule, including 40 CFR 52.21(b)(49)(v), but not the regulations that implement Step 1 of the Tailoring Rule. Coalition for Responsible Regulation, Inc. v. EPA, No. 09-1322, (D.C. Cir. April 10, 2015) (Amended Judgment).

In light of the Supreme Court's UARG decision, and consistent with the D.C. Circuit's amended judgment, each of the five Districts with PSD rules under consideration in this action requested that CARB notify the EPA that CARB and the respective Districts would like to withdraw from the respective Districts' PSD rule SIP submittals the portion of each District PSD rule that incorporates by reference 40 CFR 52.21(b)(49)(v). CARB sent a letter to the EPA dated June 1, 2015 making this withdrawal request for the five District PSD submittals. These withdrawals were designed to ensure that the EPA can act on the District's SIP submittals consistent with the Supreme Court's UARG decision concerning Step 2 of the GHG Tailoring Rule and the D.C. Circuit's amended judgment. With this withdrawal request from CARB, the EPA's action on these PSD SIP submittals will not include the provisions of 40 CFR 52.21(b)(49)(v) as incorporated by reference into the five PSD rules. This approach will ensure that the EPA's action is consistent with the Supreme Court's UARG decision and the D.C. Circuit Court's April 10, 2015 amended judgment.

The EPA intends to revise the PSD rules at 40 CFR 52.21 and 40 CFR 51.166 as a result of the UARG decision and the D.C. Circuit's amended judgment. However, in the meantime, the EPA and the states will need to ensure that “anyway” sources obtain PSD permits meeting the requirements of the CAA. The CAA continues to require that PSD permits issued to “anyway sources” satisfy the BACT requirement for GHGs. Based on the language that remains applicable under 52.21(b)(49)(iv), the EPA will continue to limit the application of BACT to GHG emissions to those circumstances where a source emits GHGs in the amount of 75,000 tons per year on a CO₂ e basis. The EPA's intention is for this to serve as an interim approach until the EPA can complete revisions to its PSD rules consistent with the Supreme Court decision. Each of the five Districts has confirmed that it intends to apply 40 CFR 52.21 as incorporated by reference into its PSD rule in a manner consistent with the EPA's interpretation of the Supreme Court's UARG decision and the EPA guidance and policy with respect to application of section 52.21 while revisions to the PSD regulations are pending. Although the Districts provided this information to the EPA prior to the D.C. Circuit's amended judgment vacating the relevant rule provisions, this confirmation is consistent with that amended judgment.

E. Transfer of existing permits issued by the EPA

With the exception of San Luis Obispo, the Districts requested approval to exercise their authority to administer the PSD program with respect to those sources located in the Districts that have existing PSD permits issued by the EPA or by the Districts as part of a delegation agreement under 40 CFR 52.21(u). This would include authority to conduct general administration of these existing permits, authority to process and issue any and all subsequent PSD permit actions relating to such permits (e.g., modifications, amendments, or revisions of any nature), and authority to enforce such permits.

Consistent with section 110(a)(2)(E)(i) of the Act, the SIP submittals and additional information provided by the Districts make clear that each District has the authority under State statute and rule to administer the PSD permit program, including but not limited to the authority to administer, process and issue any and all permit decisions, and enforce PSD permit requirements within each District. This applies to PSD permits that the Districts will issue and to existing PSD permits issued by the EPA that are to be transferred to the Districts upon the effective date of the EPA's approval of the PSD SIP submittals.

F. Public comment and proposed action

Because the EPA believes the submitted rules fulfill all relevant CAA requirements, we are proposing to fully approve them as a revision to the California SIP pursuant to section 110(k)(3) of the Act. Specifically, we are proposing to approve the rules listed in Table 1, except for Step 2 of the GHG Tailoring Rule found at 40 CFR 52.21(b)(49)(v) as incorporated by reference into each rule, which was subsequently withdrawn from CARB's request for SIP approval. Our determination is based, in part, on the clarifications provided by the Districts related to the implementation of the PSD program, including the clarifications related to PM_2.5 SILs and SMC, in letters dated November 13, 2014, November 25, 2014, December 16, 2014, December 18, 2014, April 8, 2015, and April 15, 2015. We intend to include these clarification letters as additional material in the SIP.

We will accept comments from the public on this proposal until August 24, 2015.

III. Incorporation by Reference

In this rule, the EPA is proposing to include in a final rule regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is proposing to incorporate by reference the rules listed in Table 1 of this preamble, except for the portion of each rule that incorporates Step 2 of the GHG Tailoring Rule at 40 CFR 52.21(b)(49)(v). The EPA has made, and will continue to make, these documents generally available electronically through www.regulations.gov and/or in hard copy at the appropriate office of the EPA (see the ADDRESSES section of this preamble for more information).

IV. Statutory and Executive Order Reviews

Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve state choices, provided that they meet the criteria of the Act. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.);
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and
• Does not provide the EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

List of Subjects in 40 CFR Part 52

• Environmental protection
• Air pollution control
• Carbon monoxide
• Greenhouse gases
• Incorporation by reference
• Intergovernmental relations
• Lead
• Nitrogen dioxide
• Ozone
• Particulate matter
• Reporting and recordkeeping requirements
• Sulfur oxides
• Volatile organic compounds