On August 28, 2015, the United States Environmental Protection Agency (USEPA) proposed a limited approval and limited disapproval of the Bay Area Air Quality Management District's (BAAQMD) proposed amendments to the New Source Review (NSR) Rules, Regulation 2 Rules 1 and 2. The proposed changes to Regulation 2, Rules 1 and 2, were a portion of the California State Implementation Plan (SIP) submitted on April 22, 2013. For the most part, the submitted NSR Rules satisfy requirements, and have been partially approved by the USEPA. However, the USEPA found deficiencies with requirements related to Minor NSR, Prevention of Significant Deterioration (PSD), and Nonattainment NSR. BAAQMD has 18 months to two years to remedy the deficiencies, resubmit revisions and have these approved by the USEPA, or USEPA will be obligated to promulgate a Federal Implementation Plan. Key highlights from BAAQMD's 2013 submittal along with USEPA's findings have been outlined below:

  • Minor NSR Requirements:
    • Overall strengthening of BAAQMD's minor NSR program including, but not limited to, (1) new provisions for public notification and comment for minor NSR projects that result in a significant net emission increase, (2) new and revised provisions clarifying what new and modified sources are exempt from obtaining an ATC permit.
    • Key deficiencies: Rule 2-2-308, as proposed, was found to be insufficient in prohibiting the BAAQMD from issuing an Authority to Construct (ATC) for minor modifications causing National Ambient Air Quality Standard (NAAQS) violations. Furthermore, the rule submittal for minor NSR requirements did not contain sufficient prohibition for BAAQMD's issuance of an ATC pursuant to the control strategy requirements of 40 CFR 51.160(a).
    • PSD Requirements: USEPA found that the proposed rules satisfy most of the statutory and regulatory requirements for PSD permit programs. However, four deficiencies were identified by the USEPA.

(1) Rule 2-1-234.2, as proposed, incorporates by reference substantive requirements of the PSD applicability procedures for determining if a project will result in a major modification by incorrectly referencing 40 CFR 51.166(a)(7). This was found to be deficient since this citation contains instructions to the State and not requirements for an applicant seeking a PSD permit.
(2) The definition of a PSD pollutant, as proposed in Rule 2-2-223, was found to be deficient in that it excludes pollutants that are designated as "Non-Attainment" for a California or NAAQ Standard. This conflicts with the federal definition, which includes all NAAQS pollutants, regardless of attainment status.
(3) The air quality analysis requirements as proposed in Rule 2-2-305.3, only requires the BAAQMD Air Pollution Control Officer's approval for modified or substituted air quality models in situations where the model specified in 40 CFR Part 51 Appendix W (Guideline for Air Quality Models) is found to be inappropriate. Pursuant to 40 CFR 51 Appendix W, the USEPA Administrator's approval is also required.
(4) The fugitive emission calculation procedure as proposed in Rule 2-2-611 was found to be inadequate because it excludes stationary source categories which, as of August 7, 1980, are regulated under section 111 and 112 of the Clean Air Act (CAA) from fugitive emission calculations for PSD as well as NNSR permitting purposes.

  • NNSR Requirements:
    • Overall strengthening of the NNSR program including, but not limited to (1) incorporation of new District requirements such as BACT (equivalent to federal Lowest Achievable Emission Rate [LAER]), and offsets, (2) new requirements for Class I areas (3) specific calculation procedures to determine if a project will result in a major modification.
    • Key deficiencies:

(1) Language in Rule 2-1-234.2 for nonattainment pollutants, as proposed, was found to incorrectly incorporate by reference applicability procedures in 40 CFR 51.165(a)(2).
(2) Rule 2-2-401.4, as proposed, does not adequately require visibility analysis for all sources that may have an impact on Class I Federal Areas.
(3) Rule 2-2-411.2 pertaining to offset refunds, as proposed, does not provide an appropriate time frame for NSR applicants to be eligible for offset refunds in situations where excess offsets were provided at the time of permit issuance.
(4) Rule 2-2-412 as proposed does not provide a remedy if the BAAQMD fails to demonstrate NOx and POC offset program equivalence.
(5) Rules 2-2-605.2 and 2-2-606.2 were found to be deficient because they allow existing "fully offset" sources to generate emission reduction credits (ERCs) and/or calculate emission increases based on the difference between post-modification Potential to Emit (PTE) and the adjusted pre-modification PTE. Instead, ERCs as well as emission increases must be based upon the pre-modification "actual emissions", and the post-modification PTE.