MEMORANDUM

DATE:		August 20, 2012
TO:		File / Public Docket EPA - R09 - OAR - 2012 - 0566
FROM:	Jeanhee Hong, EPA Region 9, Office of Regional Counsel
		Laura Yannayon, EPA Region 9, Permits Office
RE: 	Call with Clark County Department of Air Quality regarding rule deficiencies identified in EPA's proposed rule at 77 FR 43206 (July 24, 2012)
            
            
Clark County Participants:  Tina Gingras, Michael Uhl, Dennis Ransel, Gary Miller, Richard Beckstead, Russell Roberts, Roger Ferland, Colin Campbell, Catherine Jorgenson.

EPA Region 9 Partipants: Amy Zimpfer, Jeanhee Hong, Laura Yannayon, Gerardo Rios.

EPA (Amy) requested that Clark County explain the roles of Roger Ferland and Colin Campbell.

Clark County (Tina) explained that Roger Ferland (Quarles & Brady) and Colin Campbell (RTP Associates, LLC) are legal and technical consultants on these permitting regulations.

EPA (Amy) noted that this conversation will be on the record because it relates to a pending SIP action for which we are in the middle of the public comment period.  

EPA (Jeanhee) explained that the Sierra Club recently filed a deadline suit alleging that EPA has failed to take timely action on several of these permitting rules, which constrains EPA's schedule for action.  Jeanhee stated that EPA expects final action by late September on the permitting rules will help in negotiations with the litigants in this case.

Clark County (Tina) explained that several of the identified deficiencies appear to be issues that developed since Clark County submitted the rules (e.g., requirements for the PM2.5 and lead NAAQS, and PM2.5 precursor requirements) and turned it over to Roger Ferland for specifics. 

Roger stated that a lot of the deficiencies appear to be based on new requirements but that Clark County thought the County had up to three years to submit a lot of these subsequent requirements.  Roger also stated that in some cases, for example the stay, the status is very confusing and that even EPA conceded that the stay is very confusing.  

EPA (Amy) requested clarification on the latter point and Roger clarified he was referring to EPA's stay of the Fugitives Rule.

Roger stated the County would delete the language in Section 12.1, subsection 12.1.3.6(a)(5) that EPA had identified as problematic, but asked whether it was permissible for states to adopt provisions that have no applicability to the SIP and don't interfere with the control strategy (i.e., don't have anything to do with SIP goals).  For example, odor requirements, public nuisance requirements.

EPA (Jeanhee) responded that state/local agencies are free to develop regulations not required by the Clean Air Act (e.g., rules addressing odor, public nuisances) and that those regulations do not need to be submitted for approval into the SIP, but that to the extent a rule is submitted to EPA for SIP approval as part of a minor NSR program, EPA would evaluate that rule for compliance with applicable CAA requirements.

EPA (Laura) stated that 40 CFR 52.23, which was designed to address Federally-Enforceable State Operating Permit programs (FESOPs), states that all conditions of a permit issued pursuant to a SIP-approved program are federally enforceable.

EPA (Gerardo) stated that conditions in a permit issued through a SIP-approved program are federally enforceable, but if the County wanted to have state-only conditions in a permit, this could be okay if the program makes clear that those conditions do not come from a SIP-approved program.

Roger asked why the County's "insignificant activities" list in its title V regulation (Section 12.5) cannot be incorporated by reference into the minor NSR program and stated that the County had submitted the "insignificant activities" list in Section 12.5 to EPA as part of its title V program submission.

EPA (Jeanhee) stated that incorporation by reference (IBR) is a term that has specific legal effect and that a regulation must actually use those words in order to have the effect of incorporating separate rule provisions into it.  Provided state law allows for IBR and the minor NSR rule (Section 12.1) uses the words "incorporation by reference," EPA would treat those referenced provisions as part of Section 12.1, but Clark County would have to submit the IBR'ed provisions as part of the SIP submission, not as part of a title V submission.

Roger stated that this sounded like a simple fix that Clark County could make.

On the definition of "allowable emissions" in Section 12.2 (PSD rule): Roger acknowledged that the term "practically enforceable" is not defined in the rule and stated the County might use the term "federally enforceable" instead, which is defined in EPA rules.  Roger asked why EPA had objected to the language about "permit conditions with future compliance date" and stated that 40 CFR 51.166(b)(16)(ii) explicitly allows for this.

EPA agreed to review the language in 40 CFR 51.166(b)(16)(ii).

On the definition of "baseline actual emissions" in Section 12.2: Clark County stated that EPA's preamble from 2002 (NSR reform rule) states that with respect to contemporaneous changes, "currently" doesn't mean "currently."  Clark County referenced EPA's 2002 final rule at 67 FR 80186, 80197 and stated that according to the preamble, with respect to contemporaneous changes, "current" refers to limits, source operations, etc. just prior to the date of the contemporaneous change.  So, it doesn't mean current but rather what "was" current just prior to the particular date of the contemporaneous change.  Clark County said it was not sure how to address this issue given the County was trying to clarify ambiguities in EPA's rule, and EPA itself has acknowledged that the language in the rule is not clear.

EPA (Jeanhee) stated that the most straightforward fix would be to simply track the federal definition, which is the language that EPA ultimately codified, and that to the extent Clark County wants to explore language that departs from the federal rule, EPA is not in a position to opine on that at this time.

EPA (Gerardo) stated that it seems we are all confused about which date applies to which "particular action" and suggested that Clark County take this opportunity to explain how it interprets its rules, and where it believes its language may provide clarification.

Clark County agreed to provide such an explanation in their comments.

Clark County (Michael Uhl) stated that it was not clear why EPA thought the provisions in Section 12.3 (Nonattainment NSR rule) for ozone (NOx/VOC) and PM2.5 (SO2/NOx) interpollutant trades were deficient.  Michael stated that the language in subsection 12.3.6 provides 3 parts: (1) interpollutant trades are not allowed, (2) intra-pollutant trades of NOx and VOC are not prohibited, and (3) intra-pollutant trades of PM2.5 and SOx or NOx are not prohibited.  Michael also noted that Appendix S specifically allows for intra-pollutant trading (not interpollutant trading).

EPA (Jeanhee) stated that Appendix S does not apply to this action and that Clark County's rule is inconsistent with EPA's requirements in 40 CFR 51.165(a)(11) for PM.2.5 precursor trades.

EPA (Laura) stated that for ozone, precursor trades are allowed where the offset ratio has been demonstrated and the rule requires case-by-case EPA concurrence.  Precursor trades for ozone are not approved into the SIP but the permitting actions generally come in to EPA.  So the rule must specify that for interpollutant trading of ozone precursors, EPA concurrence is required.  For PM2.5, EPA stated in the preamble to the PM2.5 implementation rule that only SIP approved trading ratios would be allowed, and suggested approvable ratios for NOx and SOx.  Since that time, EPA has retracted its suggested ratios and has stated in a memo that only SIP approved trading ratios based on local modeling of appropriate trading ratios is allowed, and that the interpollutant trading ratios must be approved as part of SIP NSR program or part of the attainment demonstration for the area.

EPA and Clark County agreed that Clark County is currently designated attainment/unclassifiable for the PM2.5 NAAQS, so offset requirements for PM2.5 don't currently apply.

EPA (Jeanhee) asked whether Section 12.3 essentially allows for precursor trades at a 1:1 ratio.

Clark County stated that the rule does not specifically establish a 1:1 ratio and that the County's intent was to bank PM2.5 credits in advance of a nonattainment designation.  

Clark County noted that it seemed the better solution would be to pull these provisions out of the rule, and develop offset/banking provisions later upon nonattainment designation.

EPA agreed.

Clark County asked why EPA thought the Section 12.3 provisions regarding emission reduction credits were deficient and stated that the definition of "surplus" tracked the federal definition.

EPA (Jeanhee) stated that CAA section 173(c) prohibited the use of any emission reductions required by the Act for offset purposes, and that Clark County's definition of "surplus" was too narrowly drawn to cover NSPS and NESHAP under section 111 and 112 of the Act.  

Roger stated that this was a straightforward fix.

With respect to other requirements related to offsets, Roger stated that the NSR rule (Section 12.3) should have incorporated Section 12.7 into the rule, specifically only subsection 12.7.5.  Roger stated that this was Clark County's intent.

Clark County asked why EPA did not include Section 12.11 (general permits rule) in EPA's July proposal.

EPA (Jeanhee) stated that the role of Section 12.11 in Clark County's minor NSR program was not clear from the text of Section 12.1, and that in the absence of an explanation of its role and how the rule complies with the requirements for minor NSR programs, EPA was unable to draft a rationale supporting a proposed action.

EPA (Laura) stated that it became apparent during EPA's review that Section 12.11 was really part of the minor NSR program, but that it was not clear how the rule met the requirements for minor NSR programs in 40 CFR 51.160-51.164.

Clark County asked that EPA explain what needs to be done in response.

EPA (Laura) explained that Clark County could revise Section 12.11 as part of its rulemakings to revise Section 12.1 to address EPA's concerns.

Clark County (Russell) said the County would comment on the record on other disapproval issues as well and would try to be as detailed in the comments as possible about its proposed fixes. Russell stated that it would help if, in the final action, EPA gave some indication of whether Clark County's proposed fixes would be adequate.

EPA agreed to provide these explanations.

